What is a cash offer in real estate? You might have heard about cash offers and you are wondering if they are legit. Are they too good to be true, or are they the real thing? Find out what you need to know about cash offers so you know whether to accept one for your real estate property.
What is a cash offer in real estate?
Cash offers are exactly what they sound like. A cash offer is an offer made from a buyer to a seller to purchase real estate for cold hard cash or cash-like sources of funds.
In its simplest form, a cash offer is made from a buyer who plans to buy the property in cash. They won’t fund the purchase with a mortgage.
The more complex answer is that a cash offer is an offer to buy a piece of real estate where they buyer uses cash or cash equivalents. In other words, they will not use a traditional lender (mortgage) to fund the purchase. So technically this means the buyer might use cash but they may also use money from another source that isn’t a mortgage. These sources might include private money loans (think rich friend or family) or hard-money loans.
Are these offers for real or a scam?
Cash offers are, for the most part, very real and very legit. These offers are more common than most people realize. In fact, according to Statista, 41,000 houses sold for cash in 2019, and according to CNBC “all-cash sales now make up about 36% of the market, according to realtor.com.”
Who makes cash offers?
Typically it is real estate investors who make cash offers. But cash offers can be made by both homebuyers and real estate investors.
Real estate investors, especially home buying companies use cash offers to entice buyers to sell real estate for a discount. They also use them to purchase real estate that wouldn’t qualify for traditional mortgages. Also, this type of sale closes significantly faster than a sale using a mortgage for funding.