Two Offers, One Decision: How Sellers Should Choose Between Cash and Contingent Buyers Article courtesy of Realtor.com
“For example, a conventional buyer might give a $520,000 offer on a $500,000 home, hoping to get their dream house, while a cash buyer might just give a $500,000 offer. You may deprive yourself of a conventional buyer who is emotionally attached to your home as is and willing to pay top dollar,” says Rhodes. Pros and cons of a conventional (financed) buyer According to Whitney Dutton, residential sales director and adviser at Native Realty in Fort Lauderdale, FL, conventional offers will almost always sell for more money for two reasons. First, financed buyers are risking less cash out of pocket and are, in turn, fine with paying more. Second, the majority of financed buyers are end users, not investors. “They’re emotionally attached to the property and less focused on getting the best deal,” explains Dutton. On the flip side, conventional buyers have to undergo a third-party appraisal. “If the home does not appraise at the agreed-upon selling price, the buyers can cancel the contract and get a full refund of their deposits,” says Dutton. There’s also a financing contingency period. For example, a buyer may have 30 days to get a loan. If they get denied due to their credit, lack of job security, or another reason, they’re entitled to a full refund of their deposit. Then you, the seller, will
have to start the selling process from scratch. Agents weigh in: Which buyer would they choose? Whether you should go with the cash or conventional buyer depends on your personal situation. “If you’re buying another home and you need the proceeds from the sale to do so, I would advise you to consider the cash offer as it’s less risky,” says Dutton. However, if you don’t have any plans for how you’ll use the funds and are more flexible with the closing date, the financed buyer is likely your best bet, especially if your goal is to get as much as you can for your home. JJ Gorena, real estate agent at eXp Realty LLC in San Antonio, TX, explains that if one of his buyers gets a cash and conventional offer, he suggests they consider two factors: the net amount they’ll receive at closing and their timeline. “If a cash offer is more than 5% lower than a financed offer, I feel there is a mitigated risk to take the higher financed offer. Even though the cash buyer can close quicker and theoretically allow for a smoother closing with less red tape, the conventional offer is the way to go as long as timing and property condition isn’t an issue,” explains Gorena. Keep in mind that while the sales price is
