Cash? So What?

Mortgage and Lending with Mortgages in AZ, CA, CO, DE, FL, GA, IN, MD, MN, MT, NC, NJ, NV, OK, OR, PA, SC, SD, TN, TX, UT, VA, WI NMLS #138061 MMCD #1141

In today's tight-inventory real estate market, there's often a preference, either real or perceived, toward cash buyers.  "They're buying cash" is often used as a way to portray a buyer as some kind of powerhouse.  Sellers are often told that cash offers are better, because "it's cash!".  

In reality, though, everyone buys with cash.  USD is the currency used in the US to buy & sell real estate (calm down crypto bros, that's a discussion for another blog on another day).  Whether that cash comes direct from a briefcase or direct from a bank, it's worth exactly the denomination of dollars being used.

But cash buyers are a sure thing...

Are they?  Anecdotal evidence suggests that cash buyers often expect a discount that buyers using financing don't expect.  Cash buyers can also be more picky on inspection issues and repairs, and often times cash buyers will still want a way out via an appraisal contingency.  


Financed buyers carry more risk...

Do they?  Well, yes and no.  This largely falls on the lender financing a transaction.  Did the lender writing a preapproval letter have a 5 minute conversation with the buyer, ask if they had a pulse,  and require them to breathe into the phone to confirm they're alive and breathing before sending over a preapproval letter?  Or did they require income and asset paperwork, review credit, submit the loan to automated underwriting and/or an actual underwriter for review, and receive approval before issuing a preapproval letter?

The former presents some risk.   The latter presents the same level of risk as a cash buyer!  


But cash can close now!

Yes, cash transactions can occur faster, in theory.  Most mortgage lenders can close a mortgage loan, on average, in just a couple weeks when working with well qualified buyers.  Can cash buyers move faster than that?  Theoretically.  Do they?  Not often.  Cash buyers will often still want to have an appraisal done, to schedule inspections, and to do their due diligence, which can take just as much time as the process of getting a mortgage loan.

That said, if a seller is looking to close in days and not weeks, the advantage would lean to a cash buyer.  But how often is 2 weeks not enough time?  In my history in the real estate industry, not very often.


Not your granddaddy's preapproval

For a very long time in the mortgage industry, "preapprovals" were generally very informal, with a loan officer asking some questions over the phone to "prequalify" home buyers and issuing a letter to be presented to a seller that states a buyer can buy a home.  The issue with this approach is that sometimes buyers have credit issues they're unaware of.  Sometimes income is documented differently than the borrower feels should be reported (eg variable income, seasonal income, income moving from W2 to 1099).

Today, lenders (at least the good ones) still have that application interview with a prospective buyer, but also require income documentation, asset documentation, a credit analysis, and as an extra safeguard (at least what I do as part of my team's best practices), have an underwriter review and approve a loan file before our buyer finds a home.  In this instance, with a clean title report and acceptable appraisal (if required), there's just about 0 chance a buyer using financing represents a risk to a seller.


Is Cash King?

A cash buyer isn't necessarily willing to spend more cash, and often is willing to spend less, than a financed buyer.  Cash if often used for leverage, and many investors I know will buy a house using cash to get a discount from their perceived strength, only to slap a mortgage on the property shortly after settlement to recoup their cash.  In this scenario, it ends with a seller netting potentially less from the sale than had they entertained financed offers at higher prices.


With today's thorough preapprovals, lightning fast underwriting turn times, and streamlined loan services, financed offers for buyers working with the right lender are just as strong as cash, and often not expecting of a "cash is king" discount.  Sellers should entertain financed buyers that are well approved, and expect their agent to find out what level of preapproval a potential buyer has been subject to.  Homes in good shape and priced to comparable sales are easily obtained by financed buyers using conventional, FHA, USDA, or VA financing.  Though properties with defects, safety concerns, or environmental issues may be easier to sell to a cash buyer, the majority of US home sales could be completed in similar time frames for cash or financed buyers.

Cash was king.  In today's world, financed offers can deliver all the benefits, and often more, to sellers.

Posted by

John Meussner
NMLS ID #138061

It's more than a house - it's home.  So we offer a wide range of mortgage products at competitive prices to help our clients achieve financial security at home.  While we get great feedback on our prices and products, many clients say their favorite part of working with John Meussner & MasonMac is the level of service provided along the way.

Purchase money loans, Refinance, Renovation, Jumbo, FHA, VA, USDA, nonQM, HELOCs, and more

Licensed in
and VA


(484) 680-4852
Call or Text

Email Me

My Blog

Loan Options


Comments (6)

Don Baker
Lane Realty - Eatonton, GA
Lake Sinclair Specialist

My broker has said.... in the end the buyer will walk out with a wire or a check just the same, a well qualified buyer offering more is better than a lower cash offer.

May 23, 2023 12:27 PM
John Meussner

I agree with that sentiment - once the wire hits, it's all the same dollars!

May 23, 2023 12:49 PM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Hi John.... you're "singing my song." I've been saying this for a long time. Now, if you have a cash buyer who is not doing an appraisal... that may well be worth serious consideration. And I've had a few of those transactions.

May 23, 2023 01:15 PM
John Meussner

That is true!  There are definitely SOME circumstances where cash helps.  But sellers shouldn't always consider it necessarily better than financing.  Glad you're singing the same tune : )

May 23, 2023 05:03 PM
Bob "RealMan" Timm
Ward County Notary Services - Minot, ND
Owner of Ward Co Notary Services retired RE Broker

Well thought out and expressed point of view John Meussner . I don't know if things vary by State or community but I have seen cash sales close in 48 hours here.

May 23, 2023 01:41 PM
John Meussner

Cash can definitely move faster under the right circumstances (especially if waiving inspections/appraisal in maybe a tear down situation or something) ---- but most often sellers don't need to move that quickly, and even cash buyers want assurances about the property and due diligence, so they're not always faster.

May 23, 2023 05:04 PM
Dorie Dillard Austin TX
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
NW Austin ~ Canyon Creek and Spicewood/Balcones

I appreciate this post John Meussner ,

I agree cash use to be King but now there are other factors playing in to the equation and it all centers around the lender and how good they are. My sellers have chosen financing over cash in some cases as financing was paying a higher price netting my sellers with more.

May 23, 2023 06:50 PM
Kat Palmiotti
406-270-3667,, Broker/REALTOR® - Kalispell, MT
Helping your Montana dreams take root

The fastest deal I was ever involved with took 12 days from listing to closing. It was cash. But that was definitely a very rare transaction. Often times, a financed deal can be stronger overall than a cash deal.

May 24, 2023 05:23 AM
Brian England
Arizona Focus Realty - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

These are great points that you make and sellers definitely have to decide which offers seem best to them.

May 24, 2023 05:38 AM