{ "media_type": "text", "post_content": "What is the benefit of selling a home to a cash buyer? \n\nI know it’s probably a noob question, but I’m just trying to understand. Is it only because buyers who are pre approved for a mortgage still may not secure financing? Idk if that’s even true or not but that’s the only thing I can think of beyond getting your money (slightly?) sooner", "post_id": "610b2766a6a1dc00222afcad", "reply_count": 18, "vote_count": 2, "bowl_id": "59064a3cb12379001006592c", "bowl_name": "Personal Investment Chatter" }

What is the benefit of selling a home to a cash buyer? I know it’s probably a noob question, but I’m just trying to understand. Is it only because buyers who are pre approved for a mortgage still may not secure financing? Idk if that’s even true or not but that’s the only thing I can think of beyond getting your money (slightly?) sooner

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Cash buyer takes out the need for an inspection and appraisal the bank would require

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Three main reasons: 1.) you get the cash faster. Financing means have to deal with appraisals, paperwork, credit checks, which in the best case takes weeks 2.) risk of outright rejection on the buyers financing. This is rare, but happens. Especially if someone lies about preapproval or loses a job or can’t furnish the minimum down payment due to an unexpected personal emergency. 3.) risk of an appraisal gap. The bank doesn’t want to allow individuals to buy a house and be immediately underwater, so they have independent appraisers come out. In a hot market like today where people are paying five figures over asking routinely, it’s more likely than ever before. Not that an appraisal gap can’t be overcame, but it might lead to renegotiatiations on the purchase price or complete drop out if the buyers don’t want (or don’t have) cash to cover the gap. All three of those together play into it - in one sentence: faster money, significantly reduced risk.

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It is purely certainty. Virtually all offers are contingent upon financing approval - so a cash offer removed the primary ‘out’ that most buyers have

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A pre approval does not guarantee that the borrower will be able to secure financing. There is always a chance that the actual underwriting process will result in the borrower being denied the loan. A lender may also balk at providing financing if appraisals or inspections find issues with the home. For example, if the house appraises lower than the sales price, the lender will reduce how much they’re willing to lend because the lender uses the home as collateral. In short, cash offers removes the borrowers lender from the equation. One less third party is one less thing that can sink the deal.

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Close asap, no financing contingencies, no bank-required inspections. Could have that cash in pocket in a week.

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This is the correct answer.

Cash buyers are usually able to close in 15 days or less financing buyers can take significantly longer. Although generally speaking because of that a cash buyer will have a lower offer price

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Really nothing unless you’re trying to close ASAP.

Incorrect, appraisal is the biggest reason (but not the only one). You could get an offer $50k over ask, but if the buyer has a mortgage is has to appraise for the offer price. Cash buyer doesn’t need an appraisal and can pay whatever they’re comfortable with.

My parents are going through the process of selling now and accepted the highest offer that came in the first 48 hours which was continent on financing. Over two weeks later and the appraiser hasn't even come out yet. If it's low they might have to start over, a month later and in a potentially cooler housing market. A cash offer and they'd probably be closing this week.

I'm not apprised of all the details but there is a certain contractual amount that buyer would chip in if the appraisal is a little bit low but regardless this is what they are worrying about right now instead of being excited that they have a pending sale for a very respectable price.

Removes risk from financing falling through.

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