As a seller, you may wonder if a cash offer is automatically a better deal. The most significant advantage of a cash offer is speed. A buyer paying cash does not need to secure financing or go through the appraisal process to purchase your home.

A cash offer may not always be the best offer that you receive, especially if you’ve listed your home in a competitive real estate market. Your risk tolerance, desired sale price and selling timeline should all be considered when evaluating any offer on your home.

5 Advantages of a Cash Offer

1. Cash Can Lead to a Quicker Home Sale

A cash offer can close quickly because you don’t have to wait for the financing and underwriting process. …

You can expect a streamlined closing process with a cash deal because no home appraisal is necessary for mortgage loan approval. There is also no need for a lengthy back-and-forth between buyer and lender regarding assets or documentation. The deal can move forward if the buyer has the cash and the title is clear.

2. Greater Flexibility Around Closing

Since there’s no lender and less likelihood of the need for an appraiser, a cash deal offers more leeway when it comes to scheduling your closing. You can set closing dates that work for your needs, whether you want to close quickly or prefer to stretch it out for a month or two. This also gives you more time to shop for title and escrow services instead of choosing for expediency’s sake.

3. Fewer Contingencies

Cash offers remove an element of uncertainty that’s sometimes evident in the mortgage process, where certain hurdles can derail a transaction. For example, the stress of a financing contingency is eliminated since there is no uncertainty about a buyer’s loan falling through

“I recently had a signed contract on a townhouse listing,” says Julia Boland, a licensed associate real estate broker based in Manhattan, New York. “The buyer’s financial circumstances changed, and he was unable to secure a mortgage for the contract price. Because he had a mortgage contingency, the seller was obligated to return the downpayment and relist the property.”

4. Cash Makes It Easier to Sell Your House ‘As-Is’

While a buyer can finance the purchase of a home that’s sold as-is, the lender and the type of loan that they use may mandate certain requirements for the deal to go through. For example:

• FHA loans carry minimum property standards that require a home to be structurally sound and safe.
• USDA loans have strict requirements for a home’s cosmetic and structural condition, as well as its major systems, including heating, cooling and electrical.
• VA loans, which are designed for veterans, members of the military, and their surviving spouses, have stricter minimum property requirements than most other types of mortgages.
• Conventional loans typically have more lenient requirements, but some lending institutions may necessitate a home inspection as part of the approval process.

5. Lower Closing Costs for the Buyer

While not a direct benefit to the seller, the buyer will pay less in closing costs since there are no mortgage lender fees.

Do Cash Offers Have Any Drawbacks for Sellers?

Some buyers who make a cash offer may hope to get a break on the sale price in exchange for a quick deal. “One misperception I see in Manhattan is that a buyer will get a discount for paying cash,” Boland says.

Consider whether selling speed takes priority over selling price. A buyer with their financing in order may be ready to make the best offer.

Which Buyers Are Most Likely to Pay Cash?

• Competitive buyers: A strong cash offer could be an effective strategy in a seller’s market, where a bidding war could develop since buyer demand exceeds the available supply of homes for sale.
• Investors: A real estate investor may be more likely to purchase your home with cash, particularly if they want to reinvest the proceeds from the sale of another property that was used to generate rental income. This can provide a tax benefit, known as a 1031 exchange, which allows an investor to defer their capital gains tax obligation if they reinvest all the proceeds into a property of equal or greater value.
• House flippers: If your home has significant issues and you want to sell it as-is, it may attract professional house flippers who seek to renovate and resell your home. To ensure a profit, house flippers will generally pay no more than 70% of your home’s after-repair value (ARV), and they will deduct the estimated cost of repairs from their offer.
• iBuyers: An iBuyer is an online company that will buy a house with cash quickly. These companies will quickly decide what to offer for your house using a home valuation tool. However, it’s common for the purchase price to be lower than what you’d receive if you listed your home for sale. Most iBuyers also deduct a service fee; Bankrate indicates that the fee may amount to 6% to 8% of the home’s purchase price.

Before You Accept an Offer: Know What Your Home Is Worth

When you make the decision to sell your home, you must know its value to price it competitively and attract strong offers. If you’re just beginning the process, a Home Valuation Report will help you determine an accurate market value for your home.

More Homebuyers Finance

Among your pool of potential buyers, the lion’s share of them will likely plan to finance. Data from the National Association of Realtors (NAR) indicates that 74% of buyers use a mortgage to buy a home. Among first-time homebuyers, 91% will finance to complete their home purchase.

How to Review Offers from Buyers Who Finance

If you’re worried about financing problems, review your potential buyers and look for the best offers with the most flexibility.

• Ensure that the buyer has secured a mortgage preapproval.
• Consider the amount of earnest money that they’ve allocated as a commitment to buying your home.
• Review any contingencies, including home inspection, financing and appraisal clauses, to ensure that you are comfortable with the terms of the sale.

The Bottom Line: Is a Cash Offer Better?

As with most things, there is no one-size-fits-all answer to whether a cash offer is best. Consider your situation as you make this financial decision, and don’t rush a real estate transaction simply because cash is involved.

Consider the following questions as you prepare to list your home:

• How urgently do you need to sell?
• What is your desired sale price?
• How much are you willing to negotiate?
• What is your tolerance for risk?
• How much certainty do you require, especially when weighed against other factors?
• What is your local housing market like right now? Is it tilted toward buyers or sellers?