Oakland, CA · Member since 2014 · 51 posts · 4 votes
I get the general idea of why a cash offer is better, it's quicker, more secure, probably won't fall through in escrow, can display POF.
But other than that, if you are underwritten and already approved for a loan amount, what's the huge difference if the seller still is going to get the same amount of money in the end, say $2M from a cash offer versus $2M from a person borrowing. If it's between a borrowing offer or no offer at all, Id think they'd still want to take the borrowing offer. It's not like a loan gets paid to the seller in installments over time or can be reversed like a credit card charge, once it's approved, the seller gets the full amount and it's sold, right?
Indianapolis, IN · Member since 2013 · 77 posts · 5 votes
10y
Mike Miller
It's simply that cash can be given very quickly. Therefore a quick close. I think I recall reading on here some transactions that are done in a week or two.
As opposed to a financed offer that is contingent upon approval, inspection, the bank dragging their feet.
Escrow Officer · Denver, CO · Member since 2016 · 64 posts · 27 votes
10y
You've got the jist of it and yes the seller gets the full amount upon closing as you stated. Keep in mind not only does cash mean a quick close and less chance of the buyer backing out, but the quicker the close, the less interest the seller has to pay on their loan that month which can make a huge difference. I would add that often times cash buyers waive inspection as well as appraisal. That's a big plus for a seller being that you do not have to worry about renegotiating a contract if the property does not appraise or if the buyer asks for inspection items to be fixed.
Oakland, CA · Member since 2014 · 51 posts · 4 votes
10y
That's what I was missing, forgot about the inspection and appraisal aspect, as then the bank may, 1) take a while to appraise it, 2) Disagree with it's value and reject the loan, the whole deal falls apart. So then a couple weeks is wasted.