If you are house hunting or doing some homework prior to putting your own house on the market then you are aware that some homes listed are only willing to accept cash offers. What exactly does this mean? And are there really enough buyers willing to pay cash? The answer to both of those questions is a bit complicated. While it might sound fishy, cash-only transactions could work out in your favor whether you are the buyer or the seller.
It has happened before, you find the house of your dreams. It has just enough bedrooms, just enough bathrooms and a backyard that’s out of a storybook. There’s only one problem, the sellers are only willing to accept cash offers. If you don’t have enough cash on hand, you will have to keep looking. Your dream home will most likely go to someone who can easily pay for the entire home in cash. So, why put this type of restriction on your home if you are trying to sell it quickly? The main reason sellers do this is because they know that their home won’t be eligible for mortgage financing. This could be due to a number of reasons, there isn’t a kitchen, a major room was abandoned mid-renovation, or a condo or townhome could be delinquent on their HOA dues. If you come across a cash-only home and have enough cash on hand, you shouldn’t automatically run away from this type of deal. It’s possible that the reason the home can’t be financed for a mortgage won’t cost all that much to fix. Do your homework and you could find this is the perfect project or investment for you.
What if you’re a seller? Should you be leery of cash-only offers? Not necessarily. It depends on your position. If you want to get rid of your home quickly or if there are major repairs that need to be done on the home and you aren’t willing to invest, then yes, cash-only offers might be your best bet. If you don’t require a cash-only only offer but get them anyway, these are most likely real estate investors. Real estate investors are companies or individuals who buy homes in any condition, fix them up and then sell them for a profit. If you don’t need to sell your home quickly and it is in good condition, chances are you won’t get too many cash offers and that’s ok. The United States is currently experiencing a low housing inventory which means that there are more buyers than sellers and a home in good condition and priced fairly should see more than one offer.
If you have some time to save up and pay cash-only for a house, you could end up finding a great deal. You’ll also be able to avoid interest rates that people who take out mortgages have to pay. If that isn’t a financially realistic goal for you and your family, no need to worry. There are plenty of good homes at affordable prices whose owners are willing to accept mortgage offers.