In today’s real estate market, buying a house with cash has certain advantages. According to a research by the National Association of Realtors on cash sales finds that cash transactions in the residential sales are about 30%. Among international buyers and investors, more than 70% properties are cash transactions. Following are important points on this transaction.
The sellers prefer cash buyers: Home sellers are preferred for smooth and quick sales. If you are the buyer buying all with cash, you will get a greater negotiating power on repairs, closing time, price and more. Some sellers are even willing to reduce the price of the house for cash buyers. It is because the buyers who are pre-approved by the lender might again denied for the cause as if the buyer has irregular employment or contract for less than two years, for personal loan depending on family member who might later opt out.
Cash buyers get discount: In the real estate, sellers maximum will not give any discount to buyers whether they come with cash or mortgage approval. However, the trend is changing. The people those who are coming with cash are getting discounts from the sellers than the mortgage buyers based on the sureness of the sale.
Can avoid low appraisal risks: By weighing a home with comparable sales, lenders determine its worth. With unknown reasons, other houses in the neighborhood may have sold for lower prices. If the appraisal has lower value, lender will reduce the loan amount that offer previously. It will happen even after buyer and seller already agreed on a certain price. If the loan amount is low, buyer may not have enough money to buy the house. In case of all cash buyers, it will not happen. Even the appraisal is low, they are able to pay without depend on any lender.
Lower closing costs: Cash buying helps the buyers to save some costs while closing. There is no need to pay a bank attorney for mortgage, real estate taxes in escrow up front, mortgage application, other loan origination fees, and assorted junk charges.
Closing is faster: If the transaction is all cash, and not obtaining a loan, there is no need for 30 or 45 days closing period. The home inspection and the other contingencies are need to satisfied or released before closing process. Once it done, around seven days the closing can take place. It provides faster money to the seller. Some things might go wrong with the faster and short escrow period.
In the cash purchase of home, the buyer cannot take any loan. It reduces the paperwork along with the mortgage approval delay. Cash buyers do not take the loans, so they do not need to pay the interest to the lenders. The risk of losing of home when loan due to the lender will not happen. Paying cash will benefit the buyer in emotionally and financially.