The benefits of cash offers — explained.
Have any of your clients missed out on the perfect house?
They might be outbid when putting in an offer.
Or, their offer might have too many contingencies.
They might even struggle to secure financing quickly enough for the seller.
Whatever problem it is, the result is the same — your clients are heartbroken after losing the perfect home. Sure, there’s always another house. But, that one felt like home.
So, wouldn’t it be great if your clients didn’t have to miss out on the right home?
A cash offer could help your clients stand out and secure the home of their dreams. Without the hassle of trying to secure financing while closing. And, having a cash offer can help your clients get into their new home faster.
Wondering if a cash offer is right for your clients? Read on to find out how your clients can benefit from cash offers. And, how having a cash offer is possible (even for buyers without much cash).
What is a cash offer?
When discussing cash offers with your clients, they might not know what a cash offer is. The best way to explain it is that with a cash offer, someone can buy a house without financing. Instead of using a mortgage loan to pay for a house, someone with a cash offer has the resources to buy the home outright.
Why should your clients have a cash offer?
So, what exactly will a cash offer do for your client?
Here are 5 key benefits of having a cash offer (and trust us, they have a big upside!)
1. Stand Out
Having a cash offer can help your clients get noticed by sellers.
The majority of home buyers don’t have the resources to put in a cash offer. So, most offers aren’t cash.
However, bigger buyers — like real estate investors — do have the means to make a cash offer, which makes it hard to compete.
Cash offers are more secure for sellers because they don’t have to worry about a buyer being able to secure a loan from a bank. Because a cash offer removes the financing contingency, many sellers prefer it — making it harder for other offers to compete. The reality is that many individuals often lose out on their dream home because investors and other buyers can make a more secure offer.
So, having a cash offer can help your clients stand out in a competitive market — increasing the chance that they’ll win the home. And, it can help them compete with big buyers.
2. Save Money
Along with helping your clients stand out, cash offers can save them thousands.
Cash offers are more secure for sellers, and, therefore, many sellers prefer them. So, simply having a cash offer can make your client’s offer stronger than any other offers. Even if theirs isn’t the highest one.
Oftentimes, a lower cash offer has a good chance of being accepted by the seller — even in multiple offer situations. This means your clients could save anywhere from $1,000 to $10,000 or more off asking price — depending on how hot your market is.
These savings can help your client purchase a home that wouldn’t otherwise be in their budget. Or, it can allow your clients to make changes to their new home, pad their savings, or any number of other things. Whatever it is, having a cash offer can help them save enough to do it.
3. Remove Contingencies
Cash offers remove contingencies — making your client’s offer stronger and more attractive to a motivated seller.
When putting an offer in on a home with a non-cash offer, your client has to include a variety of contingencies in their offer.
Financing contingencies allow your client to back out if he or she can’t secure funding. Appraisal and inspection contingencies required by the lender force your client to back out if the home isn’t worth as much as they offer. And, sale contingencies protect your clients if they’re unable to sell their current home.
While all of these contingencies ensure your client doesn’t get in a bad situation, they make the offer less secure for sellers. It’s worth mentioning that having too many contingencies can get your client’s offer rejected — even if they have the highest offer. So, unfortunately, these contingencies can result in your client losing their dream home.
However, with a cash offer, your client doesn’t have to include any of these contingencies.
Since your client has an all-cash offer, securing a loan from a lender isn’t a problem. While it’s still a good idea to get any property appraised and inspected, your client can skip these contingencies, too. And, your client doesn’t have to worry about two mortgages– so you can skip the sale contingency.
Having a contingency free offer makes your client’s offer extra attractive to sellers — because they don’t have to worry that your offer will fall through. So, a cash offer with little to no contingencies can help your client secure their dream house.
4. Close Faster
Cash offers can help your clients close faster.
Normal closings can take anywhere from 30–60 days. After finding the right home, your client has to submit a mortgage application, gather the necessary documentation, and be approved by the underwriting process. Plus, lenders often require appraisals — which alone can take 10 days.
This lengthy process can be a problem if your client or the seller needs to move quickly. Your client might have to move into a rental during this process — making them move twice. And, even worse, a seller might decide to go with an iBuyer or investor who can close faster.
A cash offer, however, removes the mortgage process — since your client doesn’t have to secure funding. So, your client can close in as little as 14 days. This means that your client doesn’t have to move multiple times, which can be exhausting, frustrating, and discouraging And, your client’s offer will be more attractive to sellers who want to close quickly — helping your client secure that home.
With a cash offer, your client can close faster — which is a win-win situation for your client and the seller.
5. Simplify Closing
Another benefit to cash offers is a simpler closing — which makes the process less stressful for everyone.
When closing on a home financed by a lender, your client has to fill out a mountain of paperwork. All of the different loan documents can be confusing and time-consuming to read through. This can make closing on a home stressful for your clients.
With a cash offer, your client doesn’t have to worry about lender paperwork or loan documents. Instead, your client can sign a simple agreement with the seller — which has minimal paperwork and no confusing terms. Rather than taking hours to go over all the documents, your client can close on a home in a fraction of that time.
Cash offers can simplify the closing process for your clients — allowing them to move into and enjoy their dream home.
When would a cash offer help your clients?
While cash offers can help your clients in any situation, here are two common ones where cash offers could have a huge impact:
1. Seller’s Market
When your client is trying to buy in a seller’s market, they’re competing against many other buyers for just a few homes.
In a hot seller’s market, your client needs to have a strong offer to compete against the other buyers. A cash offer allows your clients to make an offer that’s more secure for the seller and has few contingencies. So, you can present a better offer for the seller — which means your client has an increased chance of getting the home.
It’s also important to be able to move quickly in a seller’s market. Homes can go off the market in a single day, so your client needs to be ready to put in an offer if they fall in love during an open house. But, if your clients have to worry about securing financing, they can’t move as fast as other buyers.
A cash offer can help your clients be ready to put an offer in on a house immediately because they already have financing secured — their cash. This time savings could be the difference between your client securing the right house — or missing out on it.
Buying in a seller’s market means there’s a lot of competition for your client. So, having a cash offer that’s stronger than financed offers and allows your clients to move quickly can help them secure the perfect house — before anyone else takes it.
2. Fast Moving
Cash offers can also come in handy when your client needs to move quickly.
If your client recently relocated or has already sold their house, they probably need to find a new home as soon as possible. However, looking for a home can take weeks (and sometimes even years). And, once your client finds a home, the closing process can take months.
During the closing process, your clients may have to spend money renting a place. And, then, they’ll have to move twice — into a rental and then into their home. This whole process is frustrating and expensive for clients.
A cash offer can solve this problem by allowing your clients to move quickly on a home they like. They won’t have to wait for financing before making an offer. So, as soon as they find a house, they can start the buying process!
Plus, a cash offer helps expedite the closing process. Instead of taking 30–60 days, a cash offer can shorten the closing process to 10–14 days. So, your clients can get into a new home in a matter of days or weeks — not months.
Having a cash offer can help your clients move quickly — instead of having to move multiple times and rent somewhere in the meantime.
Wrapping It Up
A cash offer can help your clients make stronger offers — with fewer contingencies. With a stronger offer, your client can save thousands off the purchase price. And, cash offers make the home buying process faster — with a simpler closing.
In a seller’s market, like the one we have today, with low inventory, a cash offer can help your client secure the right home. And, if your client needs to move quickly, a cash offer can significantly shorten the home buying process.
The reality is that saving up enough to make an all-cash offer could be out of reach for many of your clients. But, this doesn’t mean your clients have to miss out on the benefits of a cash offer. With Ribbon, your clients can upgrade their offer to cash — without actually having the cash to buy the home outright.
Ribbon allows your clients to make a cash offer — without the traditional financing contingencies. Plus, with Ribbon, your client can close in as little as 14 business days — even before securing financing from a lender. And, if your client buys a new house before selling his or her current one, Ribbon will hold onto the home for your client.
With Ribbon, your client can get all of the benefits of a cash offer — without having to wait decades to save up enough cash.
Check out Ribbon today to help your clients get their dream home with a cash offer.