Although over 12% of real estate transactions in Frisco TX (in 2011) include some type of financing (FHA or Conventional). If you were a Frisco TX home seller, be happy about a cash offer – if it comes across your table. A cash offer could net you less (by a few thousand dollars) if the buyer offers you less but the VALUE or CERTAINTY is worth more than the dollar value in many cases.
Assuming that the CASH OFFER was within a few thousand dollars of another (financing) offer:
Value of a CASH OFFER
Cash is KING in real estate. The buyer may purchase for cheaper, but at the same time, it benefits you as a Frisco TX home seller:
- FINANCING CONTINGENCY
A cash offer, is a cash offer. The buyer does not need to be pre-approved or pre-qualified to borrow in order to purchase your Frisco TX home.
Pre-qualification or even a pre-approval is not worth much more than the sheet of paper it is written on. Many times, these pre-qualifications are taken after the credit report is reviewed and other supporting paperwork documentation are not yet verified. Circumstances can still change after the supporting documentations are reviewed.
A cash offer is proved by verified funds or a bank statement to show availability of cash for purchase.
- Buyer/ borrower credit worthiness also needs to be verified. Debt to income ratio, job stability for the past 2 years.
Lenders have become overly cautious about the loan approval process.
- PROPERTY APPROVAL
The property needs to be insurable as according to the minimum coverage level set forth by the lender. Hence, there are minimum standards to property conditions.
Some lenders will require for the property to be repaired, which means it is additional costs to your bottom line as a Frisco TX home seller.
Your Frisco TX home needs to appraise for the loan amount. Most Frisco TX home buyers purchase at a 3.5% FHA loan or 5% conventional loan. The property needs to appraise for almost full value.
If you have a CASH OFFER on your property, the appraisal is usually a non-issue because the buyer does not have to appraise your Frisco TX home.
- Time is of an essence in real estate
A cash offer allows your buyer to be able to write a contract to close just as soon as you are able. This becomes even more critical if you have vacated your Frisco TX home.
A property purchased via financing may require 3-4 week turnaround for loan approval. Depending on when you close, more than likely, you need to allocate 1 more final mortgage payment for your loan before the transaction goes through. That eats into your bottom line.
If your Frisco TX home cash buyer is able to close in 10 days, you may not need to make another mortgage payment.
Hence, if you received less net to your bottom line, there are certainly VALUE to a Cash OFFER in real estate. Certainly something to seriously consider if one comes across your transaction.
Original source of this blog is from http://www.frisco-tx-homes-for-sale.com/the-value-of-a-cash-offer-in-frisco-tx/