When going to buy a property, most people will be purchasing with financing.
From a buyer’s perspective, they might wonder why a seller prefers cash over financing, since they are going to get the money at the end of the day anyway?
Here are the benefits of cash over financing.
*There are no contingencies after the inspection period, associated with cash. Which means, that as soon as the inspection period passes, that buyer is buying that house (or they lose their deposit).
*Cash can close quickly. Often they can close in 1-3 weeks, while financing usually takes 4-6 weeks.
*Cash doesn’t depend on an appraisal, where financing does.
*If a cash buyer backs out from poor inspection results, the seller can put the property back on the market quickly. They usually only lose a week or so on the market. Whereas with a financed buyer, that property is taken off the market for a month, and if it falls through, they will have lost more time off the market.
*Financing can open up a lot of reasons for a property not to close. Here are some examples of what could cause a property to not close due to financing issues.
-Buyer wasn’t preapproved thoroughly, and upon reviewing the file more thoroughly, the lender won’t give them a loan.
-Property doesn’t appraise, and buyer and seller can’t agree on a solution.
-Buyer could have a life changing event (lose job, get a pay cut, incur some large expenses, get married, get divorced) and not be able to qualify.
-Sometimes condo buildings can’t be financed.
Those are just some examples as to why sellers would choose cash over financed. And, sometimes they might even take a little less from a cash buyer over a financed once, since they are going to be getting the money sooner, and there are less reasons for it not to close.