When you’re selling a home, deciding between an all-cash offer and an offer requiring buyer financing can impact your sale in several ways. One major consideration is the increased likelihood of the transaction closing. Cash offers present less risk for sellers because buyers don’t need to secure financing first. However, mortgage offers may allow you to net more final sale proceeds. Here’s how an all cash offer vs a mortgage compares to and affects the seller.
- All-cash offers provide quick closings and purchase security but may cap pricing potential
- Mortgage offers involve higher fallout risks but can produce higher sale proceeds
- Weigh the advantages of faster cash sales against potentially earning more from financed bids
How Cash Offers Affect Sellers
Cash offers provide security and convenience for home sellers. When buyers don’t need to find mortgage lenders and wait for the loan process, there are fewer chances of something delaying or derailing the transaction. With cash on hand to fund the purchase, buyers will likely close more quickly.
Cash offers also allow for more negotiating flexibility. Because all-cash buyers have funds readily available, they may be willing to meet a higher purchase price if it means beating competing bids. They are less constrained by factors such as appraisals and loan limits.
However, cash isn’t king for every seller. All-cash deals come with some disadvantages too:
- You won’t earn interest from escrow. In a typical 30-60 day escrow with a mortgage, you can earn extra money from interest on the buyer’s deposit. With a cash offer, there usually isn’t an escrow period.
- There is increased pressure for a quick close. Cash buyers may expect an expedited closing timeline of just a couple weeks, which requires you to move out faster.
- Cash offers could signal a lower-value property. Investors and house flippers often use cash for lower-priced homes needing repairs. Higher-value homes usually involve mortgages.
How Mortgage Offers Affect Sellers
When you accept an offer requiring financing, you take on higher risk as the seller. The buyer must qualify for and secure a home loan for the purchase. If anything hampers this process, such as a low appraisal or denied loan application, the sale could fall apart.
Waiting through a 30-45 day mortgage process also slows down your proceeds. You can’t access funds until closing and the buyer’s financing clears.
However, there are some advantages to accepting an offer involving mortgage financing:
- Mortgage appraisals help validate pricing. An appraiser must determine the property’s fair market value supports the sale price offered. If the appraisal matches or exceeds the price negotiated, it confirms you priced appropriately.
- Mortgage offers reflect serious buyers. Obtaining financing requires effort and strong credit. Going through this process signals committed buyers who have also been more financially vetted by lenders.
- You could negotiate a higher price. Since most buyers rely on mortgages, you’ll likely receive multiple financed offers to choose from, some possibly exceeding your asking price.
By understanding how both cash and financed offers affect home sellers, you can better evaluate purchase proposals to get your ideal sale terms and outcome.
Sell Your House with Barb Schlinker
If you want to sell your house for cash in Colorado Springs, Colorado, Barb Schlinker and Your Home Sold Guaranteed Realty - Barb Has the Buyers Team can help. With nearly 30 years of real estate experience, our real estate team has helped hundreds of our clients sell fast and for top dollar.
But you don’t have to take our word for it. Our track record speaks for itself. On average, we sell homes 66% faster and for over $20,000 more money compared to other realtors in Colorado Springs.
We’re able to do this because of our extensive database of over 27,000 pre-qualified home buyers, including cash home buyers. With this database, we can match you up with an interested cash buyer almost instantly.
On top of our network and industry connections, we also offer several seller guarantees to protect your interest, like our Guaranteed Sale Program and Guaranteed Cash Offer Program. Call the best realtor in Colorado Springs and start packing!