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Is A Cash Offer Better Than An Offer With Financing?

Is a cash offer best? How the home purchase is financed is not the only way to make sure your offer is most attractive to home sellers.

Is a home seller more willing to accept a cash offer over a one with a mortgage? Not always. Kathy Sperl-Bell of Active Adults Realty in Delaware explains that a "complete offer" is what makes a great offer that home sellers are willing to accept, whether it be cash or financed.

Is a cash offer better than an offer with financing? Hi this is Kathy Sperl-Bell at Active Adults Realty in Delaware. In this competitive real estate market, many buyers will ask us, if I make a cash offer, will that be perceived as a better offer than one that has a mortgage attached to it? And the answer is maybe.

But let's analyze the bigger question. What really makes a good offer? And I'll tell you that a good offer, is a complete offer. It's one with no blank spaces, no missing pieces. An offer that doesn't make the seller wonder if you're serious, and wonder if you can actually proceed to settlement. So, I recommend when you're making an offer, pretend you're the seller and ask yourself, how would I evaluate multiple offers if they came in on this very nice property that I'd like to buy?

And here are some tips: if it's a cash offer, you need to make sure to attach proof of funds, so the seller goes, cash offer and heres the cash; if you're getting a mortgage, make sure that you follow the advice of your agent and get a preapproval for a mortgage form a local lender, attach that preapproval to the offer.

Let's talk about an appropriate good faith deposit. If you're making an offer on a four or five hundred thousand dollar home, is a thousand dollar good faith deposit really sufficient? The seller is going to think perhaps, you would walk away from a thousand dollars. Not as likely if you make a five thousand or a ten thousand dollar good faith deposit. Now the seller's going to say, well this buyer is really quite serious.

You might have your agent ask a few questions about the seller's preferred settlement date. Do they need a quick settlement? Are they flexible? Would they actually prefer a longer time before they sell the home? If possible, see if you can match your request for settlement date, to what will work easily for the seller.

Furniture. Do not get involved in trying to negotiate furniture until you've completed negotiations on the purchase of the home. It just confuses things, it certainly confuses the appraiser, and it can really make negotiations convoluted; so first things, first.

Inspections. Even if you're not going to be settling for 90 or 120 days, do your inspections quickly. That way the seller will know that nothing's going to come up in the inspection, that will perhaps impede settlement.

And don't add any unnecessary contingencies, just make the offer clean and keep it simple.

I'm reminded of a transaction I was involved in several years ago. I was the listing agent of a property in a very, very nice neighborhood. And the property was clearly going to need some work, but boy, the neighborhood was great. So we priced the home appropriately. It was an estate and the executor is the person that was evaluating the offers. Yes, we did receive multiple offers, and here's how they were evaluated.

One offer came in a little bit low, it was from buyers that were going to need financing, but there was no preapproval attached. They were also going to have a home inspection, which tends to be normal, and there was a 60-day settlement. Now, remember I said, it was clearly a home that was going to need some work.

The second offer came in closer to asking, it was cash, but they also had attached proof of funds. They were not going to do a home inspection because the home needed work, and they were going to be able to settle in 30 days.

So one could say, well clearly, the cash offer was the better offer. Is it because it was cash, or was it because it was complete? It left no questions in the seller's mind, and it clearly demonstrated that the buyers and their agent knew the area, knew the values and really wanted to purchase the home.

So, cash is good, but a complete offer is the best way to ensure that your offer is the one the seller will accept.

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