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Cash is King in Idaho Real Estate Main Idaho Real Estate Insights

Why do sellers prefer Cash as opposed to a mortgage if they will be reciving the same amount of money?

Cash offer in Real Esate

Have you ever wondered why someone would take $100k cash over $105k loan offer? After closing, wouldn't the seller receive more money/ cash to them if they took the higher offer even if it involves the buyer getting a loan?

The answer is yes, whatever the buyer offers to pay is what the seller would receive, excluding costs to close and other fees. BUT the seller is taking a risk by working with someone who is getting a loan. Loans come with requirements that if gone unmet, the buyer would not be able to close and the seller would have to put the property back on the market. So there is risk involved for the seller. Additionally, in a cash offer, no one else has to get involved. The property does not need an appraisal. If an appraisal comes in below the offer, the bank would not loan the money.

So accepting a cash offer has less rick for the seller. Aslo, there is less time needed to close. With a loan involved massive amounts of communication must happen between the closing title company and all parties involved, especially the bank and borrower and loan representative. The title company needs some time to research that they can offer a clean title but after that it is pretty simple.

Why is this important to know?

Recently we are starting to see clients in bidding situations and multiple offers. Cash is a much easier purchase and the parties can agree on a quick closing date. If there is a loan involved it will take weeks if not months to get all the paperwork filled in and ready for a closing.

 
Posted by tlangford at 3/2/2016 2:39:00 PM
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Michelle Penick, Boise Idaho Real Estate Agent

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Michelle Penick

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