Cash Offer or a Home Loan Offer —What’s The Difference?
6 minute read
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August 3, 2022

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Cash offer or a home loan offer—which is better?

Despite not being the highest bidder, a prospective buyer offering an all-cash deal can be a seller’s most appealing option.

Without involving lenders or mortgage approval, a cash offer means you get a quicker closing date without worrying about whether the buyer’s financing might fall through.

What is an all-cash offer?

When prospective buyers are interested in your home and offer to cover the purchase price in cash—without a mortgage loan or any type of third-party financing—that’s a cash offer.

A seller might prefer a cash offer, even if it comes in a little below their asking price. 

Cash offers streamline the homebuying process, especially if a seller has received multiple offers.

Without financing contingencies or many of the other common contingency clauses—like an inspection contingency or a home sale contingency—selling your home becomes much easier.

Why a cash offer is different from a home loan offer

From a seller’s perspective, there’s not much difference between whether the buyer gets money from their personal bank account or through a mortgage loan.

With a cash offer, a potential buyer doesn’t need to worry about securing a bigger down payment, closing costs, or pulling together funds for an earnest money deposit. 

Instead of fretting over how much their monthly mortgage payment will be, they can focus on finding their dream house, submitting an offer letter, and choosing their preferred closing dates. 

In addition, with a cash offer, there’s less back and forth between the seller’s agent and the buyer’s agent.

Appraisals aren’t mandatory

Most lenders require borrowers get home appraisals for any property they’re interested in buying. 

Financers need to be sure the home appraises for at least as much as they will be lending to the borrower. 

If a home receives a low appraisal, a potential buyer who has submitted an offer with only a pre-approval letter could lose financing—especially if an appraisal contingency is included in their offer.

Because there’s no mortgage lender involved with a cash deal, appraisals aren’t mandatory for financing approval. 

However, it’s important for sellers to note that some buyers may still want to get either an appraisal or inspection done before completing the sale.

Cash sales have less risk for sellers.

If you’ve ever bought or sold a house that involved mortgage financing, you know the lengthy timeframes surrounding underwriting. 

For many transactions, underwriting the mortgage is the lengthiest part of the home buying process.

Depending on the financial institution, underwriting can range from a few days to several weeks if everything goes smoothly. 

It can take even longer if your buyer uses a government-backed loan program, like the FHA or VA. 

FHA home loans, for example, can take anywhere from 54-59 to underwrite and close on a home purchase.

Additionally, if anything changes in the buyer’s financial situation since they received their pre-approval, it could delay the closing date. 

At worst, the buyer’s financing could fall through.

Recognize the value of a cash purchase offer but verify funds first

Even with a cash deal, sellers can still request proof buyers have the money to complete the purchase. 

Seller’s agents can request bank statements or certified financial statements as proof of funds.

Cash purchases allow buyers to make an offer on any property

For certain mortgages, like VA, FHA, or USDA loans, buyers must find properties that meet program specifications. 

VA home loans and FHA loans have minimum property requirements, and USDA loans come with geographic and property type restrictions. 

But when buyers pay cash, they can move forward on the property they want, regardless of program limitations.

What it means to negotiate a cash purchase on a home

For most sellers, a cash offer is on the top of the list, especially if multiple offers exist. 

With an all-cash purchase offer, sellers receive a firm offer from a serious buyer at their first interaction. 

If you accept the offer, the only things left to do are arrange the closing date with the respective real estate agents, hand over the keys, and get your money.

Investors and iBuyers vs. home Shoppers: A new way to buy homes

New investors, also known as iBuyers, are using cutting-edge technology to streamline the home selling process. 

For homes requiring minimal repairs or upgrades—usually less than $10,000—iBuyers provide offers to buy homes. 

With iBuyers, sellers typically receive a cash offer to buy their home in less than 48 hours—unlike traditional home buyers who can take weeks and multiple showings to decide.

Following a quick home inspection, sellers get an estimate of repairs that need completion before closing. 

Buyers can then choose to do the repairs themselves or use the iBuyer network of home repair professionals. 

Once the repairs are completed, sellers choose their close date—sometimes as little as seven days.

Because iBuyers are cash buyers, home sellers have fewer worries once they receive and accept their purchase contract.

Simple Home Offer can help you through the process

For many sellers, a cash offer is more valuable than a financed offer—even if the mortgage offer is the highest bidder. 

This is because cash offers mean you’ll close and get your money sooner with fewer headaches and inconveniences.

And without mortgage underwriting or home appraisal contingencies, there’s less chance that the deal will fall through.

At Simple Home Offer, our priority is to help sellers experience a smooth transaction and faster closing while ensuring they get a fair price for their home.

If you’re considering selling your home, we want to help you find the most suitable buyer for your situation. 

Our process is straightforward. 

  • Submit your address
  • We provide an honest, full home report. 
  • Review the report carefully
  • Consider repair recommendations
  • Do the repairs yourself or let iBuyer’s network handle the repairs
  • Accept the cash offer
  • Hand over the keys
  • Collect your cash

No two sellers are identical. You are unique, and your home selling situation is too. 

By carefully considering our experts’ recommendations, you gain insight into how you can get the most value from selling your house and getting an instant cash offer. 

Contact Simple Home Offer today.

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