When a buyer makes an offer on a home, there are generally
5 main terms to the offer: price, earnest money, closing date,
inspection period, and, sometimes, seller paid closing costs.
Many believe that the highest priced offer is the outright best;
however, this is not always true. Most buyers obtain a loan to
fund the purchase of the home, but some are able to purchase
in cash. If a prospective buyer offers a seller cash, that usually
means that the buyer does not need to take out a loan. The
seller receives cash at closing.
If a buyer finances a purchase, the seller receives cash from
the buyer in the form of a down payment and the remainder
from the mortgage lender. In the end, the seller receives cash
at closing. So, is there a difference between a cash offer and a
From the seller’s perspective, an all cash sale usually means
that there is no financing contingency and this means there
will not be an appraisal. This is one less hurdle to overcome
to get to the closing table. This sale should be a slam dunk!
Therefore, a seller may accept a lower price all cash offer over
a higher price offer contingent on obtaining a mortgage. Cash
eliminates an element of risk in getting to the closing table.
Typically, after price, the next most important term to buyers
and sellers is the closing date. A seller may want a longer
closing date to allow more time to move out of the home, and
a buyer may want a quicker close to get into the home. We’ve
seen sellers accept lower priced offers if the buyer of that offer
can fully accommodate the sellers preferred closing date.
Another important term in the offer is the home inspection
contingency. Most offers are subject to a home inspection.
If the inspection reveals certain defects, such as a bulging
foundation wall, this sale could go ‘south’. If a buyer can
complete the inspection and any resulting negotiations in
a shorter period of time, this is also more favorable to
Selling or purchasing a home should not be more
complicated than it needs to be. Working with an
experienced Realtor with proper training and years of
experience will make this a smooth, enjoyable experience.