What is the Difference Between a Cash Buyer and a Financed Buyer?

home cash buyer

Selling a home is already a high-anxiety process, especially if you’re under pressure to sell fast. You find yourself bombarded with options and paperwork and conflicting advice. It becomes really difficult to determine which options are truly the best for you and your family at this moment in time.

Let us clarify one major question of the selling process:

Should you sell to a cash buyer or a financed buyer? What difference does it make?

First, let’s talk about the difference between these two different buyers.

  • Cash Buyer: A cash buyer is someone who is prepared to make a full payment on the house in cash. They don’t need to go through a lender. It’s just them giving you money directly in exchange for your house.
  • Financed Buyer: A financed buyer is someone who purchases your home by securing financing from a lender. They apply for a mortgage from a bank, and if they obtain a loan successfully, then they can officially buy your house.

Generally speaking, working with a cash buyer is easier and quicker. However, both options come with pros and cons. Here’s a closer look.

Benefits of Selling Your House to a Cash Buyer

It’s not impossible that a cash deal would fall through, but it’s extremely rare and very unlikely.

For one thing, a cash sale moves much quicker. There are significantly fewer hoops for your buyer to jump through. As a result, there is less time for a buyer to get cold feet or have second thoughts.

Even more significantly, the money is already there. A cash buyer offers cash because they have it. A financed buyer, on the other hand, might make you an offer, but then they have to convince a bank to loan them that money. The process they go through to secure funding is long, complicated, and introduces a few too many opportunities for the deal to fall through.

For example, even a pre-approved buyer could be denied a loan when the lender conducts a more extensive review of their qualifications. Or your financed buyer could experience a life change that suddenly disqualifies them, like a job loss.

The process of securing a mortgage also requires deeper scrutiny of the property itself, including structural surveys and appraisal. Should the lender determine that your home is worth less than the selling price, they might require a larger cash down payment from the buyer, which could be a non-starter that cancels the contract altogether.

In other words, when a cash buyer makes an offer, you’re safe to assume you’ve just sold your house.

When a financed buyer makes an offer, it’s not safe to assume anything.

Cash Buyer: You Close Quicker and Get Your Money Sooner

All those hoops we just talked about? The financing and appraisals and surveys? Those processes can take months.

When you sell to a financed buyer, you wind up in a sort of seller’s Limbo. Your house is no longer for sale, but it’s also not officially sold. You might be able to breathe easy again, but it’s also too early to tell. You could have your money in a few weeks, it could be a few months, or this whole thing could fall through, you get no money at all, and you have to start over.

For some home sellers, this is an anxiety-ridden headache. For others, it’s simply not possible. If you’re facing foreclosure or any other major life event that requires you to move on quickly, a financed buyer is only going to add stress to a stressful situation.

A cash buyer, on the other hand, is almost guaranteed to close. And oftentimes, you’ll have the money you need within days.

Benefits of Selling Your House to a Financed Buyer

You may sell your house for a higher price, howoever you’re likelier to lose money in repairs and upgrades, as well as avoidable costs like commission and closing fees.

Almost anyone offering to buy your house for cash expects to get a lower price in exchange for the convenience of a cash transaction. But speed and convenience aren’t the only benefits you get. Most cash buyers agree to purchase your house “as is.” They don’t demand repairs or upgrades. They only offer a clean and simple exchange: your house in its current condition for their cash.

One more bonus: Because cash sales are much, much simpler, you can often get through them without the help of an expensive agent. When you sell to MAC Properties, for example, it’s a straightforward purchase. We make an offer and you have your money in as little as five days. No repairs, no middleman, no commissions or fees.

Few transactions in your life will be as massive as selling your home. It makes sense that choosing the right buyer would feel like a daunting decision. The choice is a personal one, but there are far more practical benefits to selling for cash than wading (and waiting) through a complicated financing process.

If there’s anything we can do to help you explore your selling options, or if you’d like a cash offer, please don’t hesitate to reach out.

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