What Is a Cash Offer in Real Estate? Here’s What You Need to Know (2024)

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2021 was a hot year for real estate across the United States. The majority of real estate agents saw prices increase in their area, driven by a mismatch between housing supply and demand. As buyers competed to win their bids on new homes, home prices skyrocketed — in fact, 29% of buyers purchased their homes above asking price, according to a 2021 report by the National Association of Realtors®.

Throughout the year, competition became about more than just the highest price. Buyers realized another way to entice sellers to choose their purchaser: a cash sale. In the middle of 2021, cash sales made up 23% of home sales thanks not only to direct buyers and iBuyers, but traditional buyers eager to purchase a home.

One of the reasons for the increased popularity of cash offers in real estate is that they benefit both the buyer and seller. The sales process can be quicker and less stressful with a cash transaction when a mortgage isn’t involved. Buyers can save money in the long run while sellers find decreased risk that a sale will fall through. This all adds up to cash offers being a win-win solution for homebuyers and sellers everywhere.

What is a cash offer, and how common are they?

A cash offer in real estate basically means that the buyer does not finance the purchase with a mortgage. Instead, they purchase the house with a check or wire transfer for the full amount. A cash offer just means that the buyer has the full sale amount in their bank account.

You might not think that many people have the liquid assets to purchase a home for cash. But all-cash sales are actually increasingly popular. In January through June of 2021, almost one third of home purchases were cash sales. In 2021’s seller’s market, many buyers were able to win bids thanks to cash offers. Cash transactions generally mean a quicker closing process, which entices sellers to accept cash bids.

If you’re considering buying or selling a home for cash, it’s important to keep in mind that a cash deal doesn’t necessarily negate closing costs. These costs are generally less in a cash sale than a traditional sale, but they still need to be covered.

Who makes cash offers in real estate?

The first is pretty simple: a traditional buyer with the liquid assets to pay cash. These are individuals or families who are purchasing a house or condominium for their living space. A traditional buyer might have this cash ready for a home purchase if they’ve recently sold their last home and held onto the cash from the sale to avoid a mortgage on their new home.

Many direct buyers and iBuyers also will purchase houses with cash. These companies generally aim to purchase a home without financing and close quickly so they can rehab or flip the property and turn a profit.

Sellers hoping for a cash transaction rather than a mortgage-involved sale may benefit from HomeLight’s Simple Sale. After you answer a few short questions, we’ll provide you with a competitive offer that helps you sell quickly. Since there are no hidden fees or agent commissions, you’ll have the confidence that you’re selling the fastest way for a competitive cash offer.

Get a Competitive Cash Offer and Sell Fast

Clients maximize the value of their quick home sale with a competitive top market offer and no additional fees, commission or upfront costs and without having to worry about additional repairs, prepping their home for listing, or showings.

Request Offer

Why are cash offers great for sellers?

Cash offers are great for sellers for many reasons. Here are two main ways that sellers can benefit from a cash sale compared to traditional sales in which the buyer needs to finance a mortgage:

  • Speed of transaction. Particularly when you use HomeLight’s Simple Sale platform, can sell in a matter of weeks, not months. Cash sales involving direct buyers, flippers, or iBuyers can dramatically cut down on the average of 49 to 56 days that it otherwise takes to close on a traditional sale.
  • Less risk. A buyer proposing an all-cash offer may be willing to waive an appraisal, which mortgage lenders will often require to ensure they’re not financing an overvalued asset.

It’s easy to be tempted by a cash offer for your home. After all, what could be better than a quick sale for a great price? Some research shows that cash buyers pay an average of 12% less than financed buyers, as financed buyers are more likely to have to compensate for the risks to the sale that come with a mortgage in the form of a higher offer. Working with a top agent like George Kypreos can increase your chances of selling for your ideal listing price.

In Kypreos’s market, “cash offers are paying just as much as financed offers,” he says. “If I had the choice…I would rather entertain a cash offer because there’s just less red tape and risk.”

Because experienced real estate agents keep up with market trends and are experts in their respective geographical areas, partnering with a top agent can really increase your chance of selling for top dollar. And the general population is aware of how a great agent can speed up and smooth out the process! — 87% of recent homebuyers worked with an agent or a broker.

Why are cash offers great for buyers?

Cash home sales aren’t just great for sellers—they also provide many benefits to homebuyers. Cash transactions accounted for 24% of home sales in October 2021, so non-mortgaged transactions are hardly a thing of the past. However, it’s important to weigh the pros and cons of buying a house for cash.

Here are a few ways that a buyer can benefit from a cash purchase:

  • Lower purchase price. Paying cash for a house can save you money on the listing price. Sellers are often willing to accept a lower cash offer for a fast and hassle-free sale as opposed to dealing with the sometimes months-long traditional sale process.
  • No mortgage interest. One huge benefit to paying cash for a home is, obviously, that you don’t have a monthly mortgage payment. As mortgage rates are expected to continue to rise in 2022. Paying cash for a home can save you money in the long run since you don’t have to pay the high interest rates or go through the nuisance of refinancing every couple of years when a lower interest rate presents itself.
  • Tax implications. Although the buyer may not be eligible for as many tax write-offs as they might be in a mortgaged home purchase, the seller is actually the one taxed on a cash purchase if they made a net gain on the sale.

Buying a home for cash can save you money in the short term and in the long run. Before you decide whether to proceed with a cash purchase, talk to your real estate agent to make sure you’re making the right offer for the right home to fit your needs!

HomeLight Cash Offer™ helps both sellers and buyers

A cash transaction offers fantastic benefits to both sellers and buyers. And HomeLight Cash Offer™ — currently available in California, Florida, Arizona, Texas, and Colorado — adds to these benefits! Sellers that use our Cash Offer™ program have the confidence of a sale since we’ll buy your house even if your buyer backs out. Cash offers are 3x more likely to win and can get you a 5% savings, on average, versus offers with a loan.

A home transaction can be a stressful experience for both the buyer and the seller. Buying or selling for cash can reduce the stress on both sides of the transaction. So if you’re putting your home on the market or starting to look for your next dwelling, keep your mind open to a quick and easy cash sale!

Header Image Source: (Anton Marchuk / Unsplash)

What Is a Cash Offer in Real Estate? Here’s What You Need to Know (2024)


How much are closing costs on a cash deal? ›

Even if you're buying a home with cash, the one-time closing costs, or fees you'll have to pay during the closing process, can be as much as 3% of the purchase price, according to Lee Dworshak, a Realtor with Keller Williams LA Harbor Realty.

What is a cash offer on a property? ›

A cash offer is an all-cash bid, meaning a homebuyer wants to purchase the property without a mortgage loan or other financing. These offers are often more attractive to sellers, as they mean no buyer financing fall-through risk and, usually, a faster closing time. Have you received a cash offer on your home?

Are property cash buyers any good? ›

They're a great option if you want to sell your house fast. With the rise in wait times to sell a property (the average is now approaching 7 months), cash house buyers are an important part of the property market. They can provide a great solution for sellers who want sell their house for cash, and move on quickly.

Is a cash buyer always better? ›

Cash buyer or mortgage buyer – is one better than the other? Strictly speaking a cash buyer is always better – less risk, faster turn round and more control. However, if you are the cash buyer, you know you are in a good strong buying position and will often use that to negotiate a lower offer.

Who typically pays closing costs? ›

Closing costs are paid according to the terms of the purchase contract made between the buyer and seller. Usually the buyer pays for most of the closing costs, but there are instances when the seller may have to pay some fees at closing too.

Do cash buyers offer less? ›

Cash buyers will often, but not always, offer below the asking price or market value of the home. This is seen by many as a 'cash buyer discount'. Many sellers will see this lower offer as an acceptable 'payment' in return for the quicker and more secure house sale that usually comes with cash house buyers.

Why is it better to accept a cash offer on a house? ›

All-cash offers may give buyers more power. You may be able to snag a house for less than asking-price, as buyers are more willing to negotiate when cash is on the table. Reduce contingencies. All-cash offers don't require an appraisal because there's no lender involved.

Why would a cash offer fall through? ›

Past Due Taxes. Tax issues can put a complete stop to the cash sale. For example, even if your buyer has the cash readily on hand and they are in the process of transferring the funds, the real estate transaction can come to a screeching halt if your buyer has tax lawsuits.

Does a cash offer always win? ›

A sure, fast closing

This is a reason that sellers find cash offers attractive: There's no lender to say no. Not only are cash offers more likely to close, cash buyers usually close faster because they don't have to go through mortgage underwriting, which takes weeks.

Why would house be cash only? ›

Cash Only Properties Aren't In Good Condition

The main reason sellers list a property as cash only is it's not in any condition that a bank would approve financing. The home was either abandoned or foreclosed on and not taken care of for quite a while.

Who is the best house buying company? ›

The best house buying companies in 2022 are...
RankingCash Buying CompanyStar Rating Out Of 5
1The Property Buying Company4.7
2We Buy Any Home4.5
4We Buy Any House4.5
1 more row
25 Aug 2022

Do I need searches when buying a house for cash? ›

Whilst searches are required if you are purchasing with the aid of a mortgage they are not mandatory if you are a cash purchaser, as it is your own funds that will be at risk and not a mortgage lenders…. so it is your decision. But remember lenders ask for searches for a reason- to protect their investment.

Why do estate agents prefer cash buyers? ›

Cash buyers come with a reduced risk, which makes them more attractive to sellers as there is less chance of the sale falling through. When a homeowner is selling their house, they want to be able to sell in the most convenient way possible to them.

Why do sellers prefer cash? ›

When it comes to cash, the buyer either has it or they don't. As long as the funds have been verified, there is very little chance that the deal will fall through. This increased confidence in the sale is one of the biggest reasons why sellers prefer cash offers.

Do you need a deposit if you are a cash buyer? ›

It's not just property prices that can be cheaper for cash buyers. Buyers applying for a mortgage will have to be scrutinised by their lender and will also face added conveyancing fees. However, both types of buyers will still have to pay: A deposit.

How do you get closing costs waived? ›

How To Avoid Closing Costs When Buying A House
  1. Negotiate A No-Closing Costs Mortgage. ...
  2. Negotiate With The Seller. ...
  3. Comparison-Shop For Services. ...
  4. Negotiate Origination Fees With The Lender. ...
  5. Close Towards The End Of The Month. ...
  6. Check Into Army Or Union Discounts. ...
  7. Apply for An FHA Loan.

Do you pay a real estate agent if you are the buyer? ›

If you're wondering whether you need a Realtor to buy a home, the short answer is no. You might be hesitating to work with one because you don't want to be saddled with Realtor fees, but typically, buyers don't pay a real estate agent's commission — sellers do.

Can a seller accept a lower offer? ›

Home sellers are free to reject or counter even a contingency-free, full-price offer, and aren't bound to any terms until they sign a written real estate purchase agreement.

Do you need an appraisal for a cash offer? ›

There is no legal need of an appraisal for a cash home buyer. Thus, if someone is paying cash, an appraisal is not required. However, a buyer may choose to have a home appraisal even if they're not opting to do any type of traditional financing. For peace of mind, an appraisal may be a good idea.

What are the disadvantages of paying cash for a house? ›

Paying all cash for a home can make sense for some people and in some markets, but be sure that you also consider the potential downsides. The downsides include tying up too much investment capital in one asset class, losing the leverage provided by a mortgage, and sacrificing liquidity.

What is a fair cash discount? ›

A cash discount is usually around 1 or 2% of the invoice total, although some businesses may offer up to a 5% discount.

How do you handle a cash offer on a house? ›

How to make a cash offer on a house
  1. Find a home for sale you like and make an all-cash offer. ...
  2. Agree on a purchase price with the seller (this may be different from the asking price)
  3. Show proof of funds by providing a written endorsem*nt from your bank as well as bank statements.

How do you negotiate a cash offer on a house? ›

It should be a price tag higher than their quote, but slightly lower than your listed price. Most cash buyers are flexible and willing to negotiate, especially if they like your house.
1. Counter The List Price
  1. Try Creating A Bidding War. ...
  2. Place A Deadline On Your Counteroffer. ...
  3. Agree To Cover The Closing Costs.
24 May 2022

What is a lowball offer on a house? ›

By strict definition, a lowball offer is one that is significantly below market value. In practice, an offer is considered "lowball" if it is significantly below a seller's asking price. Understanding this distinction between market value and asking price is critical to your success.

How do you beat a full cash offer? ›

Here are just a few strategies that can help you beat out the competition:
  1. Get approved for your mortgage. ...
  2. Waive contingencies. ...
  3. Increase your earnest money deposit. ...
  4. Offer above asking price. ...
  5. Include an appraisal gap guarantee. ...
  6. Get personal. ...
  7. Consider a cash offer alternative.

Why is a cash offer better than a mortgage? ›

This is because when selling a home, cash offers represent less risk to the seller. A cash offer vs mortgage for a seller can give sellers more confidence in the buyer. With a cash offer, there's no chance financing could fall through. This ensures the deal goes ahead as planned.

Can I keep my house on the market after accepting an offer? ›

Can I Keep My House on the Market After Accepting an Offer? You can ask the estate agent to take your property off their website listings as this increases the chance of more offers coming in. Legally, you can still accept another offer if a better one comes in before exchanging contracts.

How do you make an attractive offer on a house? ›

7 tips for making your best offer
  1. Get pre-approved for a mortgage. ...
  2. Leave some 'wiggle room' in your offer amount. ...
  3. Research the market and the seller. ...
  4. Make a respectable offer. ...
  5. Go easy on the contingencies. ...
  6. Use your own real estate agent — not the seller's. ...
  7. Keep your emotions in the background.
25 Jun 2021

How do I calculate cash closing? ›

Basically, the formula for calculating your cash to close is: (Down payment + closing costs) − deposits and credits = total cash to close.

What's the difference between cash to close and closing costs? ›

Closing costs refer to the fees you pay to your mortgage company to close on your home loan. On the other hand, the cash to close is the total amount – including closing costs – that you'll need to bring to your closing to complete your real estate purchase.

What are the closing costs for a buyer in Washington state? ›

Who pays what closing costs in Washington state depends on the negotiation that takes place and the state of the real estate market, but homebuyers can expect to pay between 1 and 3% of the property's total purchase price.

How much are closing costs on a house in South Carolina? ›

On that day, you'll sign a number of documents, as well as pay a few fees, which are known as closing costs. South Carolina's closing costs average 1.66% to 4.94% of a home's value, with this variance depending on a number of factors, including location, services used and lender.

How do you get closing costs waived? ›

How To Avoid Closing Costs When Buying A House
  1. Negotiate A No-Closing Costs Mortgage. ...
  2. Negotiate With The Seller. ...
  3. Comparison-Shop For Services. ...
  4. Negotiate Origination Fees With The Lender. ...
  5. Close Towards The End Of The Month. ...
  6. Check Into Army Or Union Discounts. ...
  7. Apply for An FHA Loan.

Do they pull your credit the day of closing? ›

The answer is yes. Lenders pull borrowers' credit at the beginning of the approval process, and then again just prior to closing.

Can you use credit card for closing costs? ›

Use Credit Cards

“But wait, can you pay closing costs with a credit card if you're in a pinch?” The answer is yes, but within reason. It's not unusual for homebuyers to use credit cards for at least some of their closing costs, particularly for those that occur early-on in the purchase process.

Should you wire money before closing? ›

Avoid Wiring Money Day of Closing

Wire your money one to two days before closing. Don't wait and try wiring money day of closing day. There's too much going on, and there's no guarantee the funds will be available. That could lead to you closing late and not getting your keys on time.

Can I use my credit card after closing on a house? ›

How soon after closing can I use my credit card? If you already have a credit card (or opened a new card shortly after closing on a home mortgage loan) there's no need to wait before using the account.

Does earnest money go towards down payment? ›

The deposit is held in a trust account until the real estate transaction closes and the real estate lawyers or notaries disburse the funds. On closing day, your deposit goes towards your closing costs and down payment.

Who pays property taxes at closing in Washington state? ›

Escrow fee: Most lenders require an escrow fee: a deposit sufficient to cover two months' worth of property tax and mortgage insurance payments at closing. In Washington state, the buyer and seller usually split this fee unless it's a VA transaction; in that case, the seller pays the entire amount.

Who pays closing costs on a home in Washington State? ›

These are an extra 5.30% on average — and they're nearly always paid by the seller. Who pays closing costs in Washington? Buyers and sellers each pay unique closing costs to finalize a home sale. In Washington, sellers typically pay for the title and closing service fees, transfer taxes, and recording fees at closing.

Who pays the transfer tax at closing in Washington state? ›

The seller of the property typically pays the real estate excise tax, although the buyer is liable for the tax if it is not paid. Unpaid tax can become a lien on the transferred property. REET also applies to transfers of controlling interest (50% or more) in entities that own real property in the state.

Who pays closing costs buyer or seller in South Carolina? ›

Keep in mind that closing costs in South Carolina do not include realtor fees. These are an extra 5.63% on average — and they're nearly always paid by the seller. Who pays closing costs in South Carolina? Buyers and sellers each pay unique closing costs to finalize a home sale.

Who pays for closing fees in SC? ›

Closing Costs can be paid by three separate parties in the transaction – the buyer, the seller and the Lender, or a combination of the three.

What does the seller pay at closing in SC? ›

South Carolina home sellers pay both their listing agent's fees and the buyer's agent commission. The average rate for a listing realtor in South Carolina is 2.82%, while a buyer's agent averages nearly the same rate at 2.81%. That brings the total commission payout average to 5.63%.

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