365Monroe Town Talk

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Is a Cash offer different from an offer that simply does not have financing contingencies?

As far a seller can see, YES, a cash offer can be the same as an offer without a finance/mortgage contingency. On the other hand, you wouldn't want to deceive the seller by letting them believe your offer is a cash offer if it is truly not. The harm in doing so is that your offer would be a much larger risk to you and any money you gave a deposit. You see, if your financing does not come in on time for settlement, or doesn't work out at all, you have NO recourse to get your deposit money back. You would be in default. Letting the seller know that you're getting financing is a protection built in for you.

Offers to purchase real estate are always more complicated than Cash or Financing. It is generally true that a Cash Offer with proof of funds, all other terms being equal, is preferable to an offer with financing. 

A couple other items to point out to make an offer with financing more competitive: 

1. Earnest Money: Earnest Money is one of the key components of any contract. A cash offer with low earnest money is not a strong offer. Typically, earnest money serves as liquidated damages to the seller in the case of buyer default. If the cash buyer decides they don't want to move forward on that $600,000.00 cash purchase, and they have $2,000.00 of earnest money on the table, they have very little incentive to close. Such an offer would likely not be competitive in a multiple offer situation. 

2. Contingencies: Contracts can include many contingencies. These can include contingencies based on inspections, attorney review periods, other property sales, financing, etc. In competitive contract situations, eliminating or limiting your contingencies and shortening their duration makes your offer more competitive. If a cash buyer wants a 10 day inspection contingency, their offer may be less attractive. Contingencies can be limited thru diligence. For example, you can bring your inspector and contractors through at the viewing so you know what your dealing with before you make an offer, allowing you to remove an inspection contingency. Talk with your agent and attorney about what implications limiting your contingencies have. 

3. Closing Dates and Time is of The Essence: Many sellers are sensitive to fast closings. If you have to finance in a competitive situation, make sure your lender has everything they need to underwrite quickly. This way you can shorten the time you need for a mortgage contingency. 

Sellers want serious buyers. Just because your contract is cash, doesn't make you serious. My last comment is to get great professionals. Great agents, lenders and attorneys will give you the best advice and give you the best chance to get the property you want. 

We here at The Brian Bendily Home selling team is dedicated to working for you to make Selling or Buying a property as easy as possible! We have several agents that have years of experience to back them up in any Real Estate Situation. 

Thinking about Selling a home? Know first how much its worth! Receive a custom evaluation for your home, including comparisons to other homes that have recently sold or are on the market. This guarantees you receive the most accurate information available. http://brian.365monroe.com/sell/

If you have questions or if you know someone selling or buying a property, you can contact me directly at 318-381-2077 you can also view my Homes for Sale at: http://www.365monroe.com/ or Homes that just got listed

Keller Williams Realty Parishwide Partners LLC, Monroe, LA. 318-812-7653. Each office is independently owned and operated. Licensed in LA, USA. Brian Bendily

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Comment balloon 0 commentsBrian Bendily • February 13 2012 03:29PM
Is a Cash offer different from an offer that simply does not have…
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As far a seller can see, YES, a cash offer can be the same as an offer without a finance/mortgage contingency. On the other hand, you wouldn't want to deceive the seller by letting them believe your offer is a cash offer if it is truly not. The harm… more