How Do Cash Offers Work When Selling my House?

Have you heard of the term “cash offer”, or ever wondered exactly what a cash offer really means? Or you may have been mailed advertisements offering to make a cash offer on your house, or marketing that says “We pay cash for your house, fast”. What exactly is that all about? In short, when you see that kind of language, it’s actually investor’s wanting to buy your property as an investment property- either for a rental or as a flip. These investors are wanting go around you using a real estate agent and the associated fees, so that there is more money on the table for the homeowner and the investor. There are pro’s and con’s to this. Learn more about the pro’s and cons in this short article here.

There can be a wide range of things to consider when getting an offer on a home…..and a cash offer may seem like the best possible offer you can get on your house. After all, it's cash….. right?? However, what a lot of people don't realize is that a cash offer needs to be verified by what we call proof of funds. The next thing people need to realize is that the contractual terms in which the cash offer is made could make a big difference on that offer; making that cash offer not as attractive. In this short article I'll walk you through a few tips that will help you understand if your offer really is as good as it sounds, and how to separate a good cash offer from bad cash offer, along with how to tell what makes a cash offer better or worse than a conventional or financed offer.

The first thing you have to realize is that a cash offer isn't necessarily cash as you may think of it, but it's actually credit in a bank account. What gives this cash so much value compared to other offers is the fact that it is not dependent on any appraisals or any sort of financing process for those funds to be available. So the biggest and most important factor in determining a legitimate cash offer is getting what we call a proof of funds. There needs to be proof of funds, or a record and document that indicates that a set amount of money that someone is willing to offer cash for a home is actually available, and actually free to be used for that home. I recommend getting a verified proof of funds from the bank or the institution where the individual has the cash, to make sure that they actually have the money they're talking about. Sometimes people say they are willing to make a cash offer, but what they actually mean is an assignment, which is a completely different side topic for another day which I will cover in the future. But an assignment is NOT a cash offer.

The next thing after verifying proof of funds is determining if the terms of the contract the cash offer was made on are good or bad. Are the buyers asking for a higher amount of allowances in the contract? What is the closing date that they put on the contract? If the closing date is several months out, you might be way better off with a conventional financing offer that has a closing date of a couple weeks. It’s also important to take note of the closing process the buyer’s are suggesting or requiring. Are they closing with a reputable title company, or are they wanting to do a quick claim deed or some other sort of closing that is not as legitimate as using an escrow officer and title company that's going to handle the closing in a professional and safe manner.

In the many listings I have done, there have been a few times where I received a stronger offer that was a financing offer compared to Cash offers- simply because the terms of the contract was so favorable. For example they had a three week closing date and there were no allowances asked for, and they were using a tile company I had done a lot of business with and I was very comfortable with their processes. In general the cash offer is going to be much more favorable because the closing it much faster. The money is not dependent on an inspection or hinging on a certain appraisal that is out of your control- which is the case with financed offers (conventional offers). The ability for a cash offer to close quickly is single-handedly the most important aspect of a cash offer. In my experience a quick closing is what makes the cash such a great offer and so attractive. Not having to depend on inspections or appraisals in order for the financing to go through on a conventional loan is a great advantage.

If you have any more questions related to cash offers, or if you know someone who needs to sell their house in Corpus Christi, Texas, feel free to visit our site, www.corpushomebuyers.com