Are you getting ready to sell your house in Orlando? In today’s strong seller’s market, you may receive at least one cash offer regardless of the listed price.
According to the National Association of Realtors, 23 percent of home buyers (including real-estate speculators) in Orlando paid cash in 2021. Is it true, however, that cash offers are preferable for home sellers? That is determined by the offer — and the seller.
If you need to sell your house quickly and don’t want to deal with contingencies, a cash offer may be the best option for you. However, if you need more time to find a new house or want to ensure that you maximize your gains, a mortgaged buyer may be a better option.
It all comes down to the specifics of the offer, not merely where the buyer’s cash is coming from. In general, you should look at the following factors before accepting a cash offer for your home in Orlando.
What Exactly is a Cash Offer on a Home?
A cash offer is an all-cash bid, which means the buyer intends to purchase the property without the need for a mortgage loan or other financing. These offers are frequently more appealing to sellers since they imply no buyer finance fall-through risk and, in most cases, a speedier closing time.
When you have a cash offer on the table, the purchasing and selling procedure is a little different than when you have a mortgage. For one thing, the procedure is often speedier.
There is no mortgage application, documentation, or underwriting, and the buyer is usually not required to obtain an appraisal. As a buyer, you must still complete the title policy and insurance, show proof of finances, and sign closing documents. you may be able to close on an all-cash offer in as little as two weeks.
Considerations for a Cash Offer if You’re Selling a House
If you’re selling a home in Orlando, you’re likely to get a cash offer or two along the road, especially if you live in a wealthy area or in a location that’s appealing to investors.
- The Cash’s Origin
Of course, you must check that the cash buyer has the funds he claims to have. But it’s not only a matter of how much cash the buyer has; it’s also a matter of what kind of cash he has.
A buyer must have enough liquid cash in the bank to cover the remainder of the purchase price and closing charges. That’s potentially hundreds of thousands of dollars that cash buyers in Orlando must deliver at the closing in the form of a bank or cashier’s check. A buyer who needs to sell a house to raise cash is just as risky as a financed buyer because they may not be able to sell their current home on time.
- Other Potential Issues
A cash offer does not include a finance contingency, but that does not mean the offer is without a contingency. Most buyers reserve the right to appraise and examine the property before closing and cancel the contract if the examination reveals substantial repair issues.
If the inspection reveals any flaws, you will be required to make repairs and/or renegotiate the purchase price. As a result, a cash transaction may not move as quickly as a mortgage-financed acquisition, and there is still a danger that the deal will fall through.
- There will be No Mortgage if Everything is Paid in Cash
Most people are aware that selling a home takes time, ranging from two to three months depending on the real estate market. Few people comprehend who is to blame for the delay. The difficult aspect isn’t always attracting an offer if you’re priced correctly and put some effort into the presentation.
It’s getting through closing with the contract intact, which can be challenging if you’re working with a typical buyer that needs to finance their acquisition.
Even if you receive a typical offer in less than 24 hours, you’re looking at an average closing time of 46 days when lender financing is factored in. So, the absence of a mortgage is the major distinction with all-cash, which speeds up and smooths out the transaction in more ways than one.
- Flexibility in Title and Escrow
Accepting an all-cash bid on a house isn’t like selling a car for cash and just signing over the title. You’ll still need escrow services and a title search if you’re selling a house for cash. Because there is no lender involved, you will have more freedom to shop around for low-cost escrow services. However, if you’re selling to a seasoned all-cash buyer, you might not even need to do that.
Cash buyers are frequently ready to cover the seller’s title and escrow charges. This is because cash buyers are usually investors who have a deal with the title and escrow business that allows them to receive a discount known as an investor or builder rate. As a result, they pay significantly less than a seller would spend for their closing fees.
- Premium Charge
Because they are cash purchasers, some cash buyers, particularly investors, make a modest cash offer. They charge a premium because there is no risk of the buyer’s loan being denied by the bank. This may not be the best offer for some sellers, particularly those who need the cash from the sale to buy a new house.
Considering Your Options
If you are fortunate enough to receive many offers, at least one of which is cash, the actual issue to ask is: how dangerous is the financed offer? The most important answer comes from the purchasers themselves, precisely what steps they have taken to secure the appropriate finance.
A financed buyer who has a strong pre-approval letter, a good down payment, and has consistently paid his mortgage in the past is likely to get his loan. These characteristics make his offer as strong as, if not stronger than, the cash offer, especially if he offers a greater price. The idea is to look at the bargain as a whole and not be misled by the phrase “Cash”.
Cash offers can provide significant benefits to both buyers and sellers. However, they are not always the best option. If you’re selling a home, think about the benefits and drawbacks of a cash offer, as well as who is making the offer. You want to be sure you’re conducting business with a respectable party who has the funds to complete the transaction.