All Cash Offer, what's the appeal?

4 Replies

I'm fairly new to real estate and new to this site but my question is about what makes an all cash offer so attractive? 

A simple example:

There is a home for sale for $200,000 with three offers.  Two offers are for $190,000 financed (20% down) and the third offer is for $180,000 all cash.

If the seller doesn't need to sell the home super fast, why would someone accept an all cash offer?  I.e. if you don't need the proceeds asap, wouldn't you most likely make more money taking a chance on the $190,000 offer who still needs to officially close on his loan?

Also, for those scenarios where someone does need to sell quick, what is a typical discount that paying all cash can expect vs financing?

Thanks in advance

The benefit of an all cash offer is that it's quick.  A financed offer could take 45-60 days to close and there is a potential that it may fall through due to financing issues with the borrower.  On the flipside, cash is cash. They can wire you the funds (or go into escrow the very next day) as quickly as the title company can finish the paperwork. 

Cash is king. 

Sellers also like all cash offers because the chances of closing go up dramatically.  Think about it...if you're selling your property and you get one all cash offer and one financed offer, the cash offer is most likely stronger even though the contract price might be lower because the probability of it closing is faster and higher. 

I would suggest making strong offers regardless if it's cash or financed.  Meaning do not write in any weasel clauses and putting a large nonrefundable 5-7 day option fee.  Obviously you must be able to close and this requires you knowing what your lender will and will not do.

Join the Largest Real Estate Investing Community

Basic membership is free, forever.