All-cash offers have become increasingly common in today’s hot housing market. In fact, a recent study found that one-third of U.S. home purchases in 2023 were made in cash, the highest share in almost 10 years. A buyer who makes an all-cash offer has enough liquid funds to cover the full price upfront, instead of financing the purchase with a mortgage loan. But, while an all-cash offer may sound appealing, these deals can be complicated. Here’s what to know before you accept one.
Should you accept an all-cash offer to sell your house?
You get paid either way: whether the buyer pays in cash or is financing the purchase. However, accepting an all-cash offer can speed up the process significantly, since you don’t have to wait on lender underwriting and approval. Plus, all-cash offers are less likely to fall through, since there isn't a loan application in play that could be denied. If you are lucky enough to have multiple offers, a cash one can certainly be more appealing than one that hinges on a lender’s eventual approval.
That said, there are downsides too. Cash offers are often lower than finance-contingent ones - cash buyers give themselves "discounts" to account for buying with cash, since they know they’re making things faster and more efficient for you. And with many sales in today's world, you need to be wary of scams and scammers who are looking to take advantage of sellers who are preceived as being "under water" or needing a quick sale.
Ultimately, deciding whether an all-cash offer is right for you will depend on your end goal. If your main concern is simply getting the property off your hands and collecting the cash, it’s a great option. But if you have the time and want to aim for top dollar, you might get a better offer from a buyer who’s financing.
Who buys a house with cash?
All-cash buyers typically fall into one of the following categories:
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Traditional homebuyers: they may have lots of liquid funds available and might prefer to make an all-cash offer, saving the hassles associated with financing and expense of interest on long-term loans.
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Cash-home buying companies: think “we buy any home” or HomeVestors’ “we buy ugly houses.” These companies buy homes in almost any condition and can close the deal very quickly, but they typically offer a low-end price. For this reduced sale price, they typically take the house as is and there are no showings or open houses.
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iBuyers: like the "we buy any home" companies, online iBuyers will make cash offers and close deals with lightning speed. But, the offer you get won’t be as high as you could get with a traditional sale. Opendoor and Offerpad are two of the biggest players, but neither one operates in every market in the country. They will make small renovations such as replacing carpet, or painting, and then put it back on the market to sell for a profit.
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House flippers: individuals or small companies buy homes in poor condition, fix them up and sell them for a profit. They are unlikely to purchase homes already in good condition.
Are all-cash offers really better?
While all-cash offers might not garner the best price, there are some significant perks for sellers that accept one:
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Less waiting: cash offers avoid time-consuming steps like waiting for the buyer’s financing to be approved or the lender's appraisal.
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Less paperwork: cash offers cut out much of the paperwork and additional hassles associated with a traditionally financed sale.
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Less risky: cash offers don't come with financing or appraisal contingencies so is less likely to fall through — consider cash as more of a sure bet.
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Less work: cash offers from iBuyers or homebuying companies often mean you can sell your home as-is, saving you the hassles associated with staging your home and making repairs ahead of listing.
