Cash Financing

The Deal: They say "Cash is King,"  but in real estate why does it make a difference?  Doesn't the seller get the same amount at the end of the day? "A cash deal" does not mean the buyer brings a duffle bag of cash to the closing, it simply means that there si no outside financing and the buyer is paying one or a series of checks directly from a bank account.

The Good: The ability for a quick close and the lack of regulations and risks to the seller that make cash deals appealing.  With a cash deal, there are no lender regulations.  The parties do not have to worry about the appraisal of the property coming in too low.  The lack of a lender means that there is no under writing process, there is less paper work and cash closings generally can close much quicker than a deal that is finaced through a  lender.  Depending on the type of loan, most lenders with have stipulations on what condition the property can be in.  It is hard to get certain types of loans if a house is in disrepair.  With cash, this is a non issue.  With cash, it is easier to overcome home inspection issues, CO issues and in general, there is less risk to the seller because there are less potential issues that could cause a deal to fall apart during the process.  In a multiple offer situation, if two offers have the same purchase price, but one is cash and one is financed, 9 times out of ten, the cash deal will be accepted.

The Bad: Not everyone has the ability to purchase a home with cash.  If a seller is looking strictly for a cash buyer, they will severly limit their pool of potential buyers.  Since cash buyers are normally well aware of the benefits of a cash deala nd the scarcity of cash buyers, they generally aim to negotiate a lower price to reflect that.  As a seller, you might end up taking a lower price for a cash deal than you would for a financed deal.  For buyers, even if you have the cash, sometimes ti doesn't make sense to ahve all of it tied up in one property when you could be investing it elsewhere.