What’s the Deal with Making a Cash Offer on a House in 2024?
You’ve probably heard that making a cash offer on a house can give you a leg up when it comes to having your offer accepted or rejected. Considering the fact that 80% of homebuyers financed their purchase last year, it may seem frustrating to get into a market where a cash offer typically beats one that relies on financing. In this post, we’ll take a closer look at what a cash offer is and some options to make your offer look more attractive to home sellers.
What is a cash offer?
A cash offer simply means that a buyer already has the funds available to buy the house and can pay for it without securing a mortgage loan. From the seller’s point of view, it doesn’t make much difference whether the cash comes from the buyer’s personal bank account or a mortgage loan. The difference is the associated contingencies that come with a mortgage loan, which can pose an additional risk to the seller.
The most obvious contingency with an offer that requires financing is, of course, the funding itself. Though you can (and should) submit your purchase offer with a pre-qualification or preapproval letter from a lender, these funds aren’t guaranteed until the loan is fully approved.
From a seller’s point of view, if two offers are otherwise identical, and one buyer can pay cash, the cash offer is likely to be viewed as the stronger offer because it means the buyer definitely has the money and won’t risk not getting approved for financing, which can make closing on the house move more quickly.
Warren Barnes, a top agent in Fort Wayne, Indiana, says that while he does see investors bringing cash offers, “it’s also been middle-aged to older folks that have had some time to grow their net worth, and they want to own something outright and not have any debt on it.”
