Profile picture for danielle marshall

what is benefit of paying cash

  • October 24 2013 - Dolton
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Answers (10)

Profile picture for nmbostrom
A cash offer removes a lot of uncertainty in the transaction.  There is no approval needed from a lender, no deadlines to meet for the buyer, and since their is no lender there will also be no closing costs or points to be paid by the buyer.

Another benefit of a cash transaction is the feeling of satisfaction in knowing that you literally just purchased your home rather than "leasing it" from the mortgage lender until the balance is paid in full.

Some people might say, but you will miss out on the mortgage interest deduction. However, you also don't have to pay that $5,000 - $20,000 to a lender to take that deduction.  In my opinion, it is always far better to own your home outright than to pay interest on the loan just to take a deduction on your taxes.

Best of luck!
  • October 26 2013
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Profile picture for TeamBorden
I recently came across a deal that had to close in 11 days or the sheriff was going to be removing the former owners from the property. This was a foreclosure in Minnesota that had a 5 week statutory redemption period, when typically it is 6 months. But this was one case that cash truly was king. No person with a financing contingency could make an offer because the banks are needing at least 21 if not 30 days to close on a loan. This house was worth in its present state approximately 160k and my first time homebuyer picked it up for 105k. This is the ideal situation where it has made a huge difference to have cash. It really depends on the situation, like the one I described above. In most situations, the seller is looking at the bottom line, cash or not.
  • October 25 2013
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The benefit is that it makes for an attractive offer for a seller. There are several reasons for that which may include things such as no loan contingency, appraisal contingency and amount of time to close escrow.
We are not seeing any real "deductions" in price due to a cash offer because cash does not effect the market value of a property. It MAY make your offer more desirable to a seller in a multiple offer situation, which may help you win the bid.

Good Luck,

Tesa Noonan, REALTOR
  • October 25 2013
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Cash is a Beautiful Thing! It is great for both Buyer and Seller. It is a faster process without all the approvals from the banks. It looks appealing to the Seller because they know financing will not be an issue and closing can happen sooner.
  • October 25 2013
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Profile picture for Dalberth Group
Cash offers are appealing to a Seller in that the offer would not require a financing contingency.  This increases the likelihood that the deal will close (... the inability of a Buyer to obtain financing is one of the leading reasons that deals fall through...) and potentially close more quickly than an offer with a financing contingency (... as the Buyer can eliminate the time it takes to obtain financing).

Cash offers can be appealing to the Buyer as they can eliminate the cost of obtaining a mortgage and potentially close more quickly.
  • October 25 2013
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Cash is a cleaner offer than if financing is needed. In multiple offers, cash if stronger. Sellers tend to prefer cash of financed unless the price of the financed offer is much higher or the property might not qualify for financing.
From the buyers side, cash saves money on loan fees and mortgage interest payments. Why give the A-hole banks your money if you have the $$
  • October 25 2013
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There could/should be a price discount for a cash offer
as there are certain benefits to the Seller.

One is that the Seller does not have to wait up to 45 days or more waiting for the Buyer to obtain loan approval.
It takes the average Buyer from 30 to 45 days (sometimes more) to obtain loan approval (clear to close is what is really needed) and the lender could disapprove the loan on or before the loan contingency date.
Also
Most Buyers include/demand an appraisal contingency so the Buyer can kick out of the Contract or demand a decrease in the Purchase Price if the property does not appraise out.

The Seller can close on a Cash Deal days after the attorney modifications and home inspection issues are finalized.  

We have all seen deals die after the lender realizes that they cannot give a loan which puts the Seller back to where he was months before. 

  • October 24 2013
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No interest, no payments. But, I always bekieve that using the bank's money is best and save your money. Homes appreciate in value.
  • October 24 2013
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Hello Danielle,

The benefit of paying cash for a property means a much sooner closing date. If you take the financing part out of the equation you ultimately shorten the amount of time it takes to actually close.

Cash sales are also good for people who have big bank accounts and very little credit worthiness.

National Association of Realtors estimates that roughly 30% of U.S. home buyers are making their purchases 100% in cash, compared to 15% in 2008.

I hope this information helps.
  • October 24 2013
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Profile picture for wetdawgs
The biggest benefit of paying cash is you do not have a mortgage contingency in the purchase offer and you don't have costs of getting a loan added to your closing costs.

Do you get a discount over financed offers?   no.   however, two offers being equal the all cash offer may win because the funding is certain.

Be prepared to show proof of funds.
  • October 24 2013
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