Are Cash Offers Better for Sellers?

Are Cash Offers Better for Sellers?

Cash offers usually work out better for sellers for a few key reasons, including:

• Less risk: One of the biggest risks of choosing a mortgage-backed offer is that the deal will fall through if the buyer isn't approved for the loan. Most financed offers come with a financing contingency, which allows the buyer to back out of the contract if their mortgage isn't approved. With a cash offer, the funds are more reliable since there's no loan process that could snag the deal.
• Faster closing: Financed offers generally take 30 to 60 days to close because they require loan approval, underwriting and other lender steps. By removing loan-related requirements from the equation, cash sales often close in one to two weeks.
• Potentially fewer contingencies: Mortgage lenders typically require buyers to include an appraisal, and often a home inspection, before the deal can close. So, for example, if the appraisal comes in low, you may need to lower your price to complete the deal or find another buyer. By contrast, cash buyers are more likely to waive these contingencies and purchase your home as is, especially in a competitive market.

Learn more: How Much Does It Cost to Sell a House?

Who Buys a House With Cash?

Cash buyers range from investors looking for profit or cash flow opportunities to wealthy individuals who simply don't need financing. They can include:

• Rental property investors: These buyers are focused on long-term passive income and may pay with cash to secure a property quickly and start collecting rent. If they've recently sold another rental, using cash can also help them meet the tight timeline of a 1031 exchange to defer capital gains taxes.
• Traditional buyers with liquid funds: These buyers often have cash on hand from selling a previous home, like those downsizing or moving from a more expensive market.
• House flippers: If your home needs repairs or updates, a flipper may offer below-market value and then renovate and resell it for profit. They typically follow the 70% rule, meaning they'll only offer up to 70% of the after-repair value minus the cost of repairs.
• iBuyers: iBuyers, or instant buyers, are online real estate companies like Opendoor and Offerpad that use technology to value your home and give you a quick all-cash offer within two business days. Since the home will be resold for profit, expect the offer to be less than its estimated market value.
• Homebuying companies: You've probably seen advertisements from these outfits saying "we buy homes" or "cash for your home." Keep in mind, you're likely to get a below-market offer from these companies, but it might be worth exploring if you need to sell your home fast and as is.

Should You Accept a Cash Offer?

You might accept a cash offer in certain situations, especially if it can be completed faster and more reliably. Here are a few times when taking a cash offer might make sense.

• You need to sell quickly. Cash offers can close in as little as two weeks, significantly faster than the 30- to 60-day timeline for financed deals.
• You want to avoid financing delays. Let's say you get a $300,000 offer from a buyer using government-backed financing, which could take longer to approve, and a $280,000 cash offer. If your timeline is tight, you may not have the flexibility to wait for loan approval or risk the deal falling through. In that case, taking the lower cash offer may be worth the certainty of closing on time.
• You want to forego an appraisal. Appraisal-related issues are responsible for 6% of contract delays, according to March 2025 data from the National Association of Realtors (NAR). Since cash buyers don't need a lender, they aren't required to get an appraisal, and they may waive it altogether to secure the deal.

Tip: Before accepting a cash offer, lower your risk even further by asking the buyer to provide a proof of funds (POF) letter. This document verifies the buyer has the necessary funds to complete the deal and protects you from delays or a contract termination if the funds aren't available.

When to Consider a Financed Offer

For all their benefits, cash offers aren't always your best option. You might prefer going with a mortgage-backed offer when:

• The financed offer is significantly higher. Cash offers are 10% lower than financed ones on average, a study from the Rady School of Management at the University of California, San Diego, reports. If you're not in a rush, holding out for a higher financed offer might be worth it.
• The buyer is highly qualified. If a financed buyer has strong credit, solid income and a mortgage preapproval, the risk of the deal falling through is much lower. In that case, it may be worth accepting the higher offer, even if it involves a loan. Using the earlier example as a guide, taking the $300,000 financed offer could net you more money with minimal risk if the buyer is well-qualified and you're not in a hurry.
• You have time and flexibility. Cash buyers often want to close quickly, which may not work if you need more time to buy your next home.

The Bottom Line

When you sell your home, you may pay agent commissions, closing costs, repairs and other expenses ranging from 10% to 15% of the sale price. You may not want to part with even more by accepting a cash offer below market value. But if you're crunched for time and need a fast and reliable sale, a cash offer may give you more confidence the deal will close quickly and with fewer complications.

If you need to buy another home after selling yours, a strong credit profile could help you qualify for a mortgage with favorable terms. Before applying, check your FICO^® Score^Θ for free with Experian to see where your credit stands and if you need to take steps to improve it. You can also check your credit report for free every week through Experian or AnnualCreditReport.com to track your progress and catch issues early before they impact your mortgage approval.