Is There an Advantage to Being a Cash Offer?
I must admit, the inspiration to write this post hit me when I read Cindy Jones' post No Matter What You've Heard Cash Is Not Always King. Cindy definitely busts the myth that cash is not always the best offer in a multiple offer situation, which are becoming more and more common in Northern Virginia as inventory dwindles. However, there is one major advantage to being a cash offer.
Cash offers do not have to have an appraisal contingency like financed offers. When you have cash to buy a home, the only person who cares what you are paying is you. There is no underwriter making sure you don't overpay for the home. I know, I know. No one wants to over pay for a home. And when it comes to cash, most buyers think discount, not upping the ante. But the later is where your offer truly can shine. In a seller's market where there aren't enough homes to meet buyer demand, cash buyers are going to be lumped in with every other offer made. Buyers are tripping over themselves to make their offers as attractive as possible. When you have cash, if you want the home, get the thought of getting a discount out of your head. It's all cash to the seller, be it funds wired by a mortgage company, or you pulling up to settlement with a cashier's check. With cash, you can write higher than financed offers and not worry about an appraisal. You could offer five or ten thousand above, or even more, than the comps reflect current market value. That would obliterate your competition.
Ultimately, sellers are concerned with how much money they will net. And if a buyer who is offering more money to them is financed, your cash is going to mean less and less. Instead of thinking cash is entitled to a discount, think of the advantage offering more money to the seller. THAT is what is going to win you the home. Just having cash is not enough in seller's markets when buyer competition is fierce. The time for cash winning with lower offers is in a buyer's market.
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