Should I Accept an All-Cash Offer for My House?

As mortgage interest rates have increased, so too have the number of all-cash offers for homes. With cash, buyers who have the financial means or equity growth in their existing homes are avoiding the higher interest rates, which have more than doubled since the early days of the pandemic. In addition, more homesellers are prioritizing all-cash offers.

In past real estate markets, cash offers typically were reserved for distressed properties sold “as-is” or desperate sellers looking to sell a home quickly and willing to compromise on price. Zachary Flowers, a top-selling real estate agent in the Tacoma, Washington, area, explains why today’s cash offers are becoming much more attractive to homesellers:

“The number one difference between an all-cash offer and a financed offer is that a cash offer is able to close more quickly. In general, a cash offer is usually a much simpler process. There’s a lot less red tape.”

If you’re enticed by the prospect of receiving or requesting a cash offer on your home, read on. Along with our research of the latest trends, we’ve interviewed top agents such as Alex Saad, who sells properties 65% faster than the average agent in Dearborn, Michigan.

This guide will arm you with the major ins and outs of all-cash offers in real estate so you can make the most informed decision when selling your home. And if you’re planning to buy a home after selling, you’ll need to pay close attention to these trends to understand your competition in the market.

What is an all-cash offer?

Simply put, an all-cash offer is an offer made by a potential homebuyer who has enough liquid cash to purchase the property without requiring additional financing. Many of today’s all-cash buyers are using record-high equity growth from their current homes to make an all-cash offer on their new homes.

The most important thing to understand about cash offers is that because they don’t require a mortgage, they are much simpler, faster, and less likely to fall through. They are attractive to sellers because they typically close faster due to fewer contingencies (appraisal or financing), and they have fewer complications because there is no underwriting.

We’ll go into more detail about the pros and cons of cash offers later in this guide.

Are cash offers common in residential real estate?

You’d think it’d be rare for anyone to have enough cash lying around to pay for a house outright. We’re talking hundreds of thousands of dollars for most Americans looking to buy a house. But in the current housing market, 28% of buyers are making all-cash home purchases, according to a recent report from the National Association of Realtors.

“Cash offers are very common in today’s market,” Saad says, adding that in  his Michigan market, “a little over 50% of the listings we deal with end up selling with cash terms.”

Real estate investors — who can be small-scale business owners or house-buying company conglomerates — are another reason why all-cash offers make up such a big chunk of the market.

Many investors can afford to offer you a reasonable all-cash price and still make a profit when they sell because they may get reduced rates on everything from home repairs to title company fees. And making all-cash offers benefits investors because they can close on home sales much faster, which decreases the time they need to reap a return on their investment.

However, other investors or “We Buy Houses” groups will make cash offers well below a home’s market value.