Benefits of Buying Property with Cash

Sellers will often accept a lower all cash purchase offer over a higher priced offer with conventional or FHA loan financing. The purchase process is typically faster because fewer issues arise and the deal is more likely to close.

One of the issues that arise is the home not appraising for the purchase price that the buyer is requesting. Lenders use the comparative method to set the amount they are willing to lend or mortgage. Appraisals also known as comparable sales, involves choosing 3 properties and comparing those values to the property being purchased, adjusting upward or downward for updates / missing features. Often the deal will fall through unless the buyer puts more cash as a down payment or the seller discounts the selling price.

Another road block to obtaining a loan to buy a house is the borrower not qualifying for a loan once under higher scrutiny. Even if a buyer may be pre qualified to buy a home the types of loans and qualifications can change before the deal is closed.
The greatest benefit to buying with cash is a faster closing. Since the buyer doesn’t need 30-45 days to obtain a loan, closing can take place in as little as one week. This is a win-win because faster closings put money into the seller’s hands sooner and fewer problems can arise.

Real estate owned property owners are more likely to accept a cash offer due to the high number of foreclosures they have. Buying property for cash also allows the buyer to have a sense of security, not worry about mortgage payments, have equity available in case of financial emergency, and there are not restrictions on title transfers due to an underlying loan.