Is an All-Cash Offer Right For You?

If you’re looking to buy a home but don’t want to take out a mortgage, an all-cash offer may be right for you. This offer method, which requires no financing, can speed up the closing process, reduce contingencies and give buyers a leg up in competitive home sales.

All-cash offers are a great way to save money in the long run. However, it’s important to weigh the pros and cons carefully before deciding whether to go this route for your real estate purchase.

Cash Offer Programs

Many digital homeownership platforms, like Better, offer a cash offer as part of their buy-before-you-sell program. These programs allow homebuyers to submit all-cash offers, which can be submitted by a real estate agent or online.

The process is faster and less complicated than a traditional loan, which is why a lot of people prefer cash purchases. In addition to avoiding the mortgage application and documentation, there’s no appraisal to worry about and the entire transaction can close in as little as two weeks, according to Redfin.

Buyers who choose to pay all-cash for their home are able to avoid some key lending costs, including interest and principal. Depending on the deal, those savings can add up to thousands of dollars over the life of the loan. Read more

It’s also a good idea to compare the cost of paying all-cash versus applying for a mortgage to determine what’s best for your budget and financial goals. For example, if you’re trying to save for retirement or pay for college for your children, all-cash offers might not be the best option.

You’ll need to set aside cash to cover the sale price, a few percent in closing costs and any other fees associated with the transaction. This is why it’s a good idea to work with a real estate agent who has experience with all-cash offers.

Buying a home can be a stressful process, especially if you don’t have enough liquid assets to cover the full sale price of your chosen property. Using a cash offer can alleviate some of that stress, but it’s important to consider how an all-cash transaction might affect your finances and how much liquid capital you have on hand to cover emergencies.

Aside from reducing the number of potential risks, all-cash offers can help you make a strong impression on sellers and get you a lower price. “In a seller’s market, it can be a great way to beat out the competition and put you in a position to win a bidding war,” says Annapolis, MD, real estate agent Greg Beckman.

In some cases, buyers will use all-cash offers as a way to make their bids more attractive by offering an above-asking price, waiving the appraisal contingency or adding an escalation clause. These strategies come with their own set of risks, though, so be sure to discuss them with your Better real estate agent before you make an all-cash offer.

It can be hard to stand out from the crowd in a hot seller’s market. With 21% fewer homes on the market than last year and demand pushing prices to record highs, it can be challenging for buyers to find a home that fits their needs and budgets.