Cash vs. Financing: Why Cash is King

Both seller and buyer are measuring and negotiating risk—risk in the timeline before closing and the level of buyer deposits to bind the agreements. The more risk a buyer is willing to take on, the more confident a seller can be in accepting their offer.

A cash offer—even if it’s priced lower than offers that require financing—is ideal in that it removes key risks for the seller:

  • time waiting for an appraisal,
  • the results of an appraisal, and
  • the buyer’s loan underwriting process.

A cash purchase can often be completed in a fraction of the time and with little question about the buyer’s ability to meet agreed-upon terms due to financial factors.

So, can a buyer offer you cash—or something like it?

Cash

The ideal is a cash offer with a closing on your preferred timeline.

Waive financing contingency

Alternately, a buyer who’s getting financing may waive their contingency for financing (due to their confidence in getting their loan). While you may accommodate an appraisal visit, your contract with the buyer has not mention of their pursuit of financing, alleviating you of that risk.

Appraisal supplement

If a buyer with financing chooses not to waive their financing contingency, they could address one key concern of financing: the appraisal.

The buyer could offer to provide more of their own funds to make up any potential deficiency between the appraised value and their purchase amount, in the even that an independent appraiser values it at less than what your buyer has agreed to pay.


First shipment of gold from Nome to Seattle, courtesy University of Washington Libraries Digital Collections via Flickr