Fact: Most of the time, cash offers are stronger because with this kind of deal, you can request in advance some proof that the buyer has funds to close the transaction. Realtors interpret this as a guaranteed closing. On the other hand, when a prospect buyer is applying for a mortgage, neither the seller nor the buyer would know right away if the bank is going to approve the loan. We haven’t even started with the many reasons why some mortgages are being denied. But one thing’s for sure: despite having completed all the necessary paper works, property showing and whatnot, there is still no guarantee that buyers with no cash can really purchase the desired property. Only the bank knows for sure.
Pre-approval and other considerations in mortgages
The crucial part for buyers is getting a pre-approval letter from the mortgage company or bank before they start looking for homes to buy. Many realtors claim that they can help you with this right away. Yes, they can but then again, there is no assurance that they will successfully do so. Unfortunately, if the buyer is turned down, the seller has no choice but to begin marketing his property all over again. Sure, he can seek professional real estate services from a licensed broker but of course, there will be commissions and fees that have to be settled. In mortgage offers, the buyer can be pre-approved or not but either way, he still he has to do bank transactions and exhausting paper works. Then, he/she has to wait for the appraisal at least a week or two to see if the value of the property is same as what the seller is really asking for. One of the important factors to consider as well is if the home buyer will have the mortgage commitment.
Why cash offers work best
Experienced sellers would agree that a cash offer is stronger than an offer that is conditional on the buyer being approved for a mortgage or not. Cash offers are better because closing the deal is quicker and there is a minimal chance of the deal falling through. Why? Because, if the seller likes the offer, the buyer just have to sign the contract and go to closing right away. If there is no inspection or something else, the whole process can be done in… less than a month! Sometimes, the deal can be closed for just 7 – 14 days while bank loans can take more than 60 days. Indeed, cash is king!
For other articles see the Blog link in the top bar. This article talks about how a home is still the best investment tool of a lifetime.
In case you are a home owner with your house at risk, see the following previous blog post.