Answer for "What is a cash offer?"

Sherry Williams real estate agent
  Bay City Realty

Wondering what is the cash offer definition?

Well, the cash offer definition is pretty much what it says, an offer made in cash.

But aren’t all offers cash? No one buys a house giving cows in return for the property…

Actually, you’d be surprised how many people do exactly just that. Cattle is valuable. Plus, in the end, it’s also money. What the cash offer definition really means is that the home buyer will seek no financing (mortgage) in order to pay for the house. The money is coming straight out of his or her pocket and going to the home seller. Just like as if you were buying something in the supermarket; a simple cash for merchandise transaction.

So, a cash offer is something that is interesting for home sellers because it speeds up the closing process by a lot. When the home buyer does it through a mortgage process, it will take weeks from the home buyer saying “I do” to the money arriving in the home seller’s account. And it might happen that the home buyer doesn’t get approved so it’s back to square one. Cash offers can be done in 3 days.

With all of that, for the home buyer, a cash offer can be a necessary measure to beat the competition. And you know what? It’s also good to know that you won’t put your house as real estate collateral.

But the reality is that cash flow is always important, so the real reason why home buyers do cash offers is only one: to bargain a better price. It’s seducing for Home Sellers to receive at once all that money and finish the angst that is the home selling process. What if the next person that makes an offer on the house starts to bother with real estate contingencies related to a new and lengthy home inspection as a way to lower the price anyway? Worse: what if no one else makes an offer on the house? Better to close it for a little less, right? Cash offer is money in the pocket for the home seller and a chance for the home buyer with funds to make the investment even better.


Real Estate Advice:

Read our article that goes deep into the question of buying a house with cash vs. mortgage to figure out which is better suited for you. If still in doubt, contact one of our real estate agents to consult!

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