5 Things to Know About a Cash Offer on a House

Home loan / reverse mortgage or transforming assets into cash concept : House paper model , US dollar hessian bags on a wood balance scale, depicts a homeowner or a borrower turns properties into cash

Last year, existing-home sales hit the highest point since 2006 even though listings were at their lowest. Despite the pandemic, people were buying homes at a record rate.

As the demand for homes continues this year, prices are soaring. One technique for navigating the hot housing market is to purchase a home with an all-cash offer.

When you place a cash offer on a house, you have a competitive edge over those that are using the traditional mortgage loan route. Before finalizing your cash offer decision, there are things you should be aware of.

Read on to learn more.

What Is a Cash Offer Exactly?

Before getting into the nitty-gritty, it is essential to understand what a cash offer on a house is exactly. In real estate, this transaction is one where the homebuyer doesn’t require a mortgage.

Nowadays, a cash offer is made by a purchaser who has proof of funds for the entire value of the offer. They can also be referred to as “cash buyers”… After the deal is accepted, the offer won’t depend on any of the typical financing contingencies that come along with a traditional mortgage loan.

Although making a cash offer on a home is more common for real estate investors or corporate developers, this strategy is accessible to everyday individuals. It is ideal for those with the money on hand who want no strings attached.

Now, let’s dive into five things you need to know before making a cash offer on a home.

1. You Don’t Need Cash to Make an Offer

The term ‘cash offer’ might make you think of bundles of cash sitting in a briefcase or duffle bag, but you don’t have to have cash on hand for this method of buying to work.

As long as you can prove the funds in your bank account or that you have access to the funds, you will be set to make an offer.

Furthermore, some services will lend you the money to make a cash offer. Like a mortgage, you will have to pay back the money you were lent but you get to avoid long closing procedures and other home-buying technicalities.

If you want to avoid making payments for a home loan overall, this method is not recommended.

2. Quicker Closing Timeline

One of the benefits of cash offers is that the closing timeline is drastically sped up. When selling your home or buying a new one, a lengthy closing process can take the excitement out of your new journey.

When you make a cash offer on a new house, you’ll have the advantage of a speedy and smooth sale.

Signing the closing documents can take several hours, but the process doesn’t end there. The entire timeline for closing on a house can take up to 40 days.

It takes this amount of time because getting a loan through a traditional lender is a drawn-out process. Even if you are pre-approved, waiting to receive the funds takes time.

In contrast, a cash offer involves a quicker turnaround. This is mainly due to the omission of a loan, but cash buyers don’t need to get an appraisal or inspection either. You might be in your new home within the following two weeks.

3. It’s a Straightforward Process

Because buying a house with cash is a straightforward process, cash offers rarely fall through. The people who have issues with financing while trying to buy a new house do so because of the inability to get a mortgage loan.

A seller doesn’t have as much certainty in a buyer who needs a traditional mortgage. A cash purchase leads to less risk for the seller and the buyer.

Even a buyer with a pre-approval letter doesn’t give more certainty than someone who can pay cash. The mortgage broker who pre-approved the buyer can draw out the process for approval by taking a deeper look into their finances.

A mortgage lender also can deny the loan. A pre-approval letter is easy to obtain but does not provide a guarantee.

4. You Don’t Need a Real Estate Agent

While it is true that you don’t need a real estate professional to buy a house at all, even with a cash offer, it is always recommended to have one on your side. These professionals can bring additional knowledge to the table.

A real estate professional can help you understand the neighborhood you want to buy a home in and aid you in writing an offer that blows the competitors out of the water.

Even with a cash sale, you aren’t guaranteed a home. However, an agent can help with the negotiations process so that you can earn the house of your dreams.

You have the option to choose any realtor you’d like when you plan to purchase a home with a cash offer. The risk of trying to go through this process on your own is not worth it. After all, buying a home is a huge investment.

5. Hidden Cash Discounts

Some sellers will take an offer from a cash buyer even if it is lower than other offers they received traditionally. Homeowners who want an easier and faster closing procedure will offer hidden cash discounts without knowing it.

Although a possibility, it is important to note that not every home seller feels this way. The seller gets paid whether someone pays in cash or finances the home with a loan.

If the closing timeline and contingencies aren’t a concern for the seller, they are likely to take the best offer no matter where the money comes from. Even if you aren’t using a loan, it is still in your best interest to submit a competitive offer.

In order to pay cash and make it a competitive offer, find out what the seller wants to gain from the transaction. Here are common wishes seller’s ask for:

  • Buyers who are easy to work with
  • Hassle-free transaction
  • Highest price
  • Quick and on-time closing process
  • To deal with as few contingencies as possible
  • Avoiding repair work

These desires are problems that you can solve with your cash offer. Someone buying a home with a traditional mortgage might not be able to solve most of these issues.

In addition to these wishes, the seller might want to stay in the home for a few days or a week after the closing process is complete. This is because they plan to buy a home using the money they received from selling.


As a buyer, you can meet the need of the seller by offering a rent-back. This clause is stated in the purchase contract and allows the seller to stay in the home for up to 60 days, but the period is specified in the contract.

The seller will pay daily rent to stay in their home after closing. In today’s market, few buyers will utilize this technique as it puts them at a competitive disadvantage.

If the seller is adamant about staying in their home after closing, ensure that it works with your timeline. Not accepting their terms could make or break the deal even with a cash offer.

Appraisals and Inspections

Another reason you might receive a hidden discount by paying with cash is that the seller does not want to complete an appraisal or deal with an inspection contingency. For someone purchasing a home with a loan, these are requirements.

Yet, an all-cash buyer can choose to have a home appraisal and inspection done for a few hundred dollars. Spending this little amount might be worth it in the long run.

An appraisal will assure you that the amount you pay for the home is the amount that the property is worth. As the real estate market fluctuates, an appraisal can keep you from overpaying for a home even when paying in cash.

Similarly, asking for an inspection will provide you with more knowledge on repairs that might be needed. Minor repairs are often paid for by the buyer instead of the seller.

Asking for an appraisal and inspection should not deter a seller from choosing your offer over a traditional loan offer as these procedures need to get completed anyway.

An appraisal and inspection could lengthen the closing process. In the rare case that the seller receives a second all-cash offer, they might choose their offer over yours if the buyer doesn’t ask for these procedures.

Are You Ready to Make a Cash Offer on a House?

Unless you are a real estate investor, corporate developer, or filthy rich, a cash offer might not have crossed your mind. As this technique becomes more available to everyone, making a cash offer on a new house is ideal.

One way to gain the funds for this method of buying is by selling your current home for a cash offer.

At Millennial Home Solutions, we buy homes for cash in the Houston area and various places around Texas. As cash buyers that put sellers first, we strive to provide you with a fair offer on your home for a quick turnaround and we even cover the closing costs!

Contact us today to learn about our process for making an all-cash offer on your home.

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