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Everything you need to know about cash offers

October 5, 2021
/ by 
Mackenzie Kruvant
Everything you need to know about cash offers

You may have heard it said that in real estate cash is king. But why is that the case and what does that mean for buyers and sellers alike.

You may have heard it said that in real estate cash is king. But why is that the case and what does that mean for buyers and sellers alike. Check out the advantages of buying a home with cash and why it's the best route for your clients.

What is a cash offer?

A cash offer is an all-cash bid. This means a homebuyer would like to purchase the property without having to take out a mortgage loan or seek another form of financing. All cash offers have become more commonplace due to iBuyers and investment companies scooping up properties in communities across the US. These bids are also more often seen in seller’s markets, as buyers push to stand out in multi-offer situations. That is why the market was dominated by cash offers in 2021.

So, why do sellers like cash offers?

There are a few reasons sellers may prefer a cash offer—even if it’s a lower offer than someone with financing. The first reason is that all cash could eliminate contingencies (like an appraisal, inspection, and home sale) that loan officers require and often lead to negotiations with the buyer. Without these contingencies, negotiation back and forths, and all of the paperwork needed from a bank, closings can move faster.

On average a mortgage process and underwriting can take up to two months to be processed—although lately it’s been faster. This is a long and risky period. The lender or bank could still pass. Sellers and buyers may end up back at the negotiation table. Going all cash is a more sure and faster closing, which is especially helpful for a seller who is looking to buy something new.

And why do buyers like cash offers?

Besides the confidence that it gives sellers, there are lots of buyer-specific pros of going with a cash offer. For example, your credit score doesn’t factor into the process. You can reduce the amount of paperwork and documentation required, which is helpful if you own your own business. You may even end up saving money over time, as you won’t have payments (with interest!) coming out of your savings. Most importantly, you’ll have 100% of the equity in the value of your home.

How can Ribbon help you make a cash offer?

A cash offer can be intimidating to a buyer, it’s a lot of money upfront. In some cases, buyers feel that they can’t afford it. That is where Ribbon can help.

We are on a mission to make homebuying more achievable for everyone. Our RibbonCash Offer allows us to back worthy homeowners with all cash. Closing and commission are guaranteed once the inspection period ends. Come closing day, we’ll purchase the home and reserve it for your client if financing isn't secured. We’ll then offer a prorated rental option so that the buyer can move in right away. They only pay for the days they need and get some extra time (up to 180 days) to secure financing and buy the home back. We then sell it at the original contract price. A win for everyone.

Learn more about how Ribbon can help by booking an appointment with a Ribbon expert here.

Written by: 
Mackenzie Kruvant