According to the National Association of Realtors, nearly a quarter of recent home buyers paid cash for their purchase. With such a large chunk of the market willing to bypass the mortgage process, it’s important to look at the benefits and disadvantages of a cash sale before accepting an offer. Selling your home for cash could allow you to get rid of it faster, but it may result in less profit than you were hoping to make. 

While a conventional home sale requires a month or more for a buyer’s financing to be approved, the cash sale of a home is quick and simple. No mortgage loan is needed, so there is no risk of the deal going south if a buyer isn’t approved. And because there is no lender involved, an appraisal is not legally required. In a cash sale, the buyer simply has to show proof of funds for a seller to accept the offer, present those funds at closing time, and sign the title and deed. 

Such a quick, easy sale can be beneficial to a seller if:

• The home is in foreclosure or pre-foreclosure. Although less common in today’s housing market (only 1% of REALTORS® had a client with a distressed sale last summer), a quick cash sale can help a seller avoid bankruptcy or a short sale, keeping credit scores intact. 
• A major life change has happened. Some homeowners need to get rid of a home right away due to a divorce, a job transfer, or a death in the family. A cash sale eases the stress of having to wait for buyer financing to go through.
• The property needs expensive repairs. In order to approve a home loan, mortgage companies require sellers to fix problems that don’t pass inspection. Selling a home for cash bypasses this step if the buyer is willing, allowing it to be sold as-is. 

But cash offers don’t only come into play when a seller is in distress. In today’s market, most homes are selling within a month. With buyers in fierce competition for a limited amount of properties, having cash available can move a buyer’s offer ahead of the line when offers start to come in. 

For buyers, a cash sale has the additional perk of no interest payments. Mortgage rates are double what they were a year ago, making traditional buyers pay thousands of extra dollars by the time a loan is paid off. Purchasing a home with cash means getting more house for the money, and being able to keep whatever profits are made when it’s time to sell.

While cash sales are quick and fairly easy, they sometimes come with one main disadvantage: A lowball price. Buyers know that some sellers will accept thousands less for the security of a fast transaction with no inspection or appraisal required. This is why investment companies like We Buy Ugly Houses can afford to purchase so many properties around St. Louis; they buy them cheap, then flip them to make a profit.

However, not all cash buyers are out to buy properties for rock-bottom prices. Some are simply ordinary house hunters who happen to have the cash available. These buyers will often make a competitive cash offer for slightly less than or even the full listing price. Their hope is that a seller will accept cash over other buyers who need a mortgage loan. In that case, it’s up to the seller to decide what’s more important: A sure sale or holding out for more money.

Whether you receive a traditional offer or a cash offer, hiring a real estate agent takes the stress out of the selling process by allowing you to:

• Learn what your home is worth to establish a fair asking price
• Get help with decluttering and staging to make your home appealing to buyers
• Have professional photos and an accurate description of your property listed on the MLS 
• Find interested buyers, whether they're paying cash or not
• Have a contract drawn up by an expert who has been involved in cash sales before
• Get expert advice regarding which offers are legitimate, and when you should hold out for a better buyer

Some homeowners might feel like they’ve hit the jackpot if they get a cash offer. But it is still important to weigh all of the options. Your decision to accept a cash offer should be based on what’s best for your current situation. If selling quickly for a lower price provides the freedom to get out of debt or move quickly, you may want to take it. If you’re looking to sell for a higher price than the cash offer you receive, consider waiting for the next buyer. 

Realtors at Berkshire Hathaway HomeServices Select Properties would be happy to work with you during the sale of your home and help you determine which offer makes the most sense.

Cover photo by Feverpitch from Getty Images on Canva.com