In a hot real estate market where would-be buyers outnumber sellers, cash offers for homes have become increasingly popular. In April 2021, cash sales made up onequarter of all home purchases.

Despite the popularity of cash deals, mortgages still remain the most common way to buy a house. In fact, the mortgage industry originated $4.4 trillion in 2021.

Many would-be home buyers still rely on conventional financing, putting up earnest money and waiting for a lender’s approval before they can close on a house. That’s because lenders require appraisals and inspections that can derail a deal.

While these steps are important to protect a lender’s interests, they can also delay a closing, costing the buyer and seller time and money. In a competitive market, however, many buyers and sellers are turning to cash offers in order to close quickly. Click here


The most significant advantage of making a cash offer is that it avoids the appraisal and inspection contingencies of traditional mortgages, advises luxury real estate authority Bonnie Heatzig. In addition, the closing process can be streamlined.

Appraisals and inspections are required by mortgage lenders to ensure that they’re obtaining a home that is worth the amount of money that they’re loaning you. If the appraisal comes in low, or if the home is found to have serious issues, the financing may fall through.

Since lenders typically rely on appraisals to determine how much they’ll lend you, buyers often end up paying more than they expected for a property — even when it’s listed at the price they’re asking for. That’s why they’re so attractive to buyers.

Closing costs are also lower on a cash sale because there aren’t any lender fees attached. Buying a home with no financing in place is less expensive than using a mortgage, because there aren’t additional fees to pay, says veteran real estate coach Jeff House.

A cash offer also has the added benefit of being less costly for a seller, according to real estate agent Peter Grabel. “In a competitive market, cash-only offers are more likely to get a higher price because the sellers don’t have to worry about the possibility of having their deal backfire due to buyer financing.”

When you decide to sell your home with a cash offer, it’s important to understand how these offers are calculated. The main factors that affect how much a seller can expect to receive for their home are the location, the condition of the home, and the comparison of the home to other similar homes on the market.


While some cash-backed offers can be helpful for competing in markets where “cash is king,” they can come with a lot of fees and restrictions, says Deeksha Gupta, a finance professor at Carnegie Mellon University who studies real estate. In addition, cash-backed offers can limit a seller’s choice of agent or lender.

Whether you’re selling your home or thinking about buying it, be sure to understand how cash offers work before deciding to make one. Besides, don’t be afraid to ask questions, because you never know when or where you might find an excellent cash offer for your home!

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