A lot of Nanaimo homes for sale today have cash offers.
When there’s a lot of competition from other buyers, paying in cash can put your offer at the top of the stack. If you receive a cash offer when selling, there’s more peace of mind that the deal will close without any surprising problems.
Here’s why a cash offer on a house is so attractive.
What is a cash offer?
A cash offer means the buyer has “cash on hand” to buy the house without having to be approved for a loan. There’s no loan approval contingency, and oftentimes buyers paying cash won’t conduct a home appraisal (although it’s still a good idea to do).
Tips for buyers making a cash offer
If you’re thinking about paying cash for your home, here are a few things to keep in mind:
- Cash offers give sellers more confidence because there’s no lender involved
- Seller may be willing to offer a price discount for cash
- You can offer a faster closing date to the seller
- Credit score isn’t an issue
- No interest payments, which mean you save more money over time
- Less paperwork and documents required during the transaction and at the closing table
- A lot of money is tied up in the house that might better be used for other things
- Lose the power of leverage because you’re not using other people’s money (OPM)
- May lose out on tax deductions
- Buyer may ask to see proof of funds, so be sure to have the cash readily available
- Lose financing contingency, so if it makes sense, try to include the right to obtain a loan even if your initial offer is all cash
Tips for sellers receiving a cash offer
Even though prices of Nanaimo homes for sale have been steadily increasing, receiving a cash offer is still common.
Investors looking for long-term and vacation rental property, retirees who have access to their savings plans, and buyers who have a lot of cash from selling their old home are just a few examples of buyers who may make a cash offer.
- No risk of financing falling through because there’s no lender involved
- Buyer may not have an appraisal done, so the transaction process can go faster
- Homes in need of repair often attract cash buyers since they are taking the risk of updating and not the lender
- Fewer contingencies in the contract means fewer free “outs” for the buyer
- Cash offer is usually a sign the buyer is serious about buying your home
- Buyer may be more flexible with close of escrow and possession dates
- Sellers need to be sure the buyer actually has the cash on hand by asking for proof of funds
- Cash buyers sometimes try to low-ball the listing price of your home
- Buyer paying cash may still order an appraisal, and may require the house to appraise for at least the sales price
- Cash buyers may insert other contract contingencies such as need a partner’s approval or offer less earnest money because the “deal is in cash”
Cash offers are often attractive, but they’re not always better. It depends on what each buyer and seller is looking for. For sellers, getting a fair market price is still important, although cash buyers may be more flexible on not asking for needed repairs to be made, and on close of escrow and possession dates.
Buyers making an all cash offer can have the upper hand against offers with financing contingencies, especially in a hot real estate market. However, when an offer is made in cash, the seller may be more motivated to agree to a lower selling price in exchange for a quick close of escrow.