Selling a house? Chances are you’re going to get a cash offer.
Here’s the thing … Cash offers have become EXTREMELY common in the real estate market today. Nearly 39% of home sales were purchased with cash in 2024. That’s almost 4 out of 10 buyers paying cash! If you’re not prepared to evaluate these offers correctly, you’re either leaving money on the table or missing the right buyer.
The good news is: cash offers are easy to understand. They’re simple once you know what to look for.
In this post I’ll cover everything you need to know about cash offers from home sellers. Let’s dive in.
What Is a Cash Offer Anyway?
Let’s start with the obvious question: what exactly IS a cash offer?
Straight answer: a cash offer is when a buyer is offering to pay the full purchase price of your home without a mortgage or financing.
They have the funds in a liquid form (usually a bank account) to pay for the house, and they can close quickly without waiting for mortgage processing.
The buyer can be anyone: an investor, a retirement buyer, or even a local cash home buyer who specializes in quick transactions. The key is that they can cover the entire purchase price with their own money right now.
Contrary to what some people think: cash offer does NOT mean they bring a suitcase of cash to closing! All cash sales still go through escrow/title like traditional deals – they just source the funds from a bank instead of a mortgage lender.
Why Cash Offers Are Taking Over
Surprise!
Cash offers have been on the rise for the past few years and this trend isn’t stopping. And no, it’s not just rich investors driving this.
High mortgage rates are a big factor. Mortgage rates have been above 7% for most of this year. When rates are this high, buyers with the ability to pay cash are at a huge advantage.
Competitive markets also make cash king. Cash buyers can close 10-20 days faster, they have no financing contingencies, and they’re much less likely to back out.
Lots of equity owners from previous home sales. Downsizing seniors are a big source of cash buyers. They’re able to pay cash because they have considerable equity from their previous home(s) built over decades.
The Real Advantages of Cash Offers
Selling to a cash buyer is not without its perks. But before you jump at the first email you see in your inbox, it is important to understand what you are really getting.
Faster Closing Times
The main advantage of cash offers is speed.
Financed deals can take 30-45 days to close. Cash? 7-14 days.
If you need to move quickly for job reasons or just want to get on with your life – this is huge.
No Financing Contingencies
And this point is something most sellers don’t consider until it bites them…
Approximately 1 in 10 traditional sales fall out due to the buyer’s financing. With cash offers, this risk evaporates.
Less Paperwork and Hassle
Cash is simple. Period.
Eliminating a mortgage lender from the equation means far less paperwork for everyone involved. That means less forms, hoops, headaches, etc.
Better Negotiating Position
Here’s the kicker…
You might assume cash buyers lowball, but that’s not necessarily true. Studies like this one from UC San Diego showed that cash buyers pay 6-17% less on average than financed buyers. However, this varies by market.
In super hot markets with multiple offers, it’s actually not uncommon for cash buyers to pay above asking just to get the house!
Evaluating Cash Offers: What to Look For
Cash offers are not all equal.
You have “legit” cash buyers who are real professionals with the money ready to go. You also have speculators who are hoping to flip your property and make a quick buck.
In any case, here’s what you need to check:
- Proof of funds – Any reputable cash buyer should be able to show you a bank statement with the money available.
- Earnest money deposit – Cash buyers should still put down earnest money to show they’re serious. 1-3% of the purchase price is standard.
- Closing timeline – Get the specific dates in writing. “Quick closing” means different things to different people.
- Contingencies – Cash offers should have few to no contingencies. Be skeptical of cash offers stuffed full of escape clauses.
- Buyer’s track record – If it’s an investor or company, you should do a search on them. Check reviews, verify they are a real business, etc.
When Cash Might Not Be Your Best Option
Let’s have a small secret here…
Sometimes the highest cash offer is not the best offer.
If you have a financed buyer that is offering much more – A difference of $30K or more can be worth the risk, even if it is financed.
If you don’t need speed – Fast closing is the primary benefit of cash. If you don’t need to sell in a hurry, you can afford to market the house to get the highest price.
If they want a major reduction – There are cash buyers out there that will lowball you with 20-30% below market value. Unless you are desperate, this almost never makes sense.
Understanding Different Types of Cash Buyers
Different cash buyers have different motivations.
Individual buyers are often seniors or people selling their prior home to downsize. They generally pay closer to market value and are using the house as their new primary residence.
Real estate investors are always looking for rental or flip deals. These buyers will naturally want a discount from market value, but can close fast and buy in any condition.
iBuyers and cash buying companies have software algorithms that make instant offers. These deals are convenient but usually offer 10-15% below market value in exchange for no hassle.
Knowing the buyer type can help you negotiate better and manage expectations.
Protecting Yourself in a Cash Sale
Speed is the name of the game with cash, but don’t let that fool you into getting scammed.
Always use a title company or real estate attorney. This protects you from fraud, mistakes, etc. Cash buyers can still try scams.
Get everything in writing. Nothing should be verbal. You need written documentation for everything.
Read your contract carefully. Don’t sign anything without knowing exactly what you’re agreeing to.
Never wire money to a buyer. Buyers wire you money through escrow, not the other way around.
The Bottom Line on Cash Offers
Cash offers are an excellent opportunity for home sellers. Speed, certainty, and simplicity that you can’t get with traditional offers.
But they’re not always the right move. Cash offers that are lowball or with sketchy buyers should be approached with caution.
Cash is NOT inherently better than a strong financed offer in most cases.
If you want to know how to take advantage of cash offers and negotiate the best deal, read more here.
Wrapping Things Up:
Let’s just recap some critical points when it comes to cash offers:
- Verify proof of funds before you waste your time with a buyer
- Speed and certainty are the primary benefits, not price
- Get multiple offers to create competition
- Strong financed offers can trump mediocre cash offers
- Always use a title company or attorney
Now that you’re armed with the information you need: go evaluate those offers!
