If you're considering selling your home, you might have encountered the term “all-cash offer.” Or maybe as you’re driving around Pittsburgh or scrolling online, you’ve seen advertisements from businesses that say they “buy homes for cash.” What does it mean?

Here we will detail the basics of cash offers and the possible pros and cons of such deals to help you decide whether to sell your house for cash or stick with a traditional offer. 

A cash offer is when a potential buyer offers to pay for the entire cost of the house without using a mortgage loan or other financing. According to research by ATTOM Data Solutions, all-cash purchases accounted for 21.6 percent of single-family home and condo sales nationwide in the third quarter of 2020. 

The number of cash offers you may receive can depend on many factors, including your local housing market, your home's condition, or if you seek a cash offer online.

Even with the shift in the local Pittsburgh market, we are still seeing cash offers on some homes!

Here are some of the typical cash home buyers you might encounter when selling your home:

• Potential buyers - More and more average home buyers are bidding with a cash offer to stand out amongst the competition. This can be more common in a seller's market, where inventory is tight, buyer demand remains high, and bidding wars are more likely. 

• “We Buy Houses” companies - These are companies advertising that they’ll buy your house for cash. Common claims include phrases like “we buy any home” and “we buy ugly houses.” These companies aim to make cash offers on homes that might be in poor condition. They buy them on the cheap, fix them up, and sell them again for a profit.

• House flippers - House flipping, according to Bankrate, is when someone buys a property, holds onto it for a short time, and then sells it (the flip part) for a higher price. A house flipper may also take a fixer-upper and renovate it to make it market-ready. Either way, their goal is to buy low and sell high, earning a profit in a relatively short amount of time. Often flippers will make offers on homes before they get listed for sale to get a jump on the competition. If your home is more of a fixer-upper and you’d like to sell as is, you may receive a cash offer from house flippers.

• Real estate investors - Those looking to turn houses into investment or rental properties may also bid with cash. 

1. Fewer contingencies

There are usually fewer contingencies with a cash offer. Specifically, buyers won't need a financing contingency, which could derail the sale if they don’t qualify for a mortgage loan. There also won’t be a need for an appraisal that lenders require to make sure the home’s value matches its sale price.

Still, remember that every situation is unique. Some cash buyers may still ask for other contingencies, especially an inspection contingency, to protect their investment.

2. Shorter closing process

Since there isn’t a mortgage application and underwriting process to wait for, which can take up to 60 days, a cash transaction cuts down on the timeline. You may be able to close in as little as two weeks. However, this timeline can vary since you still need the buyer’s proof of funds and time to complete other closing requirements. But with a faster closing period, you’ll be able to get moving quickly and easily, especially if it’s because of a new job or any other commitment.

1. The offer may be less than expected

Since all cash is a strong offer, buyers may try to offer less than what you expected understanding their all-cash offer is attractive. It may be a bit harder to negotiate on price since their offers are typically take-it-or-leave deals. But if you’re looking for a faster and easier transaction, this may not be too much of a negative.

2. Lack of competition

The reality is that there are more traditional home buyers on the market than all-cash buyers or companies. You’ll still have a better chance of getting multiple competing offers, especially in a seller’s market, when you go through the traditional listing process. Dozens of other potential buyers are likely to come in with their best offer if you sell your home the old-fashioned way.

3. Still not 10000% Guaranteed

Another point to consider in an all-cash transaction is that despite the promise of a relatively quick and less stressful process, there is still no hard guarantee of closing until the deal is signed and you have the money in your hand.

• You think it's the best offer for your situation.

• You’ve inherited a home and don’t have the resources to either maintain it or turn it into a rental property. 

• You need to relocate quickly and need the money or your home’s equity to make a down payment. 

Many of these cash buyers or investors are also targeting homes that are challenging to sell, especially those that could turn off other buyers in which no lenders will loan a buyer money to purchase the house, such as:

• Homes with title flaws

• Homes with large amounts of past due taxes and fees

• Burned-out or storm-damaged homes

• Properties with illegal conversions or code violations

• Homes requiring major repairs

Absolutely! Our Pittsburgh- Based Team of Real estate agents are licensed professionals who can guide you through the complicated process of selling your home. You can ask for our recommendation, and we can offer valuable advice and assistance during negotiations to make sure its as smooth and stress-free as possible!