What Is a Cash Offer in Real Estate? Here’s What You Need to Know
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Britt Spread, Contributing AuthorClose
Britt Spread Contributing AuthorBritt is a Chicago-based writer who loves writing articles that help people find and move into great homes. She believes that together we can make the world a better place, and it starts with written communication.
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Sam Dadofalza, Associate Refresh EditorClose
Sam Dadofalza Associate Refresh EditorSam Dadofalza is an associate refresh editor at HomeLight, where she crafts insightful stories to guide homebuyers and sellers through the intricacies of real estate transactions. She has previously contributed to digital marketing firms and online business publications, honing her skills in creating engaging and informative content.
In a competitive seller’s market, coming to the table with a cash offer — rather than traditional financing — can give you an advantage over other potential buyers. The volume of home sales softened this 2024, weighed down by high mortgage rates and rising prices, but the demand for all-cash offers has persisted.
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Back in January 2024, cash buyers made up 32% of home sales, the highest rate since 2014. Many buyers who had enough savings to make a cash offer or could leverage their equity took that route to avoid paying more interest over time.
With mortgage rates expected to remain in the upper 6% range, the prevalence of all-cash buyers is likely to continue, particularly as homeowners seek to build more housing equity.
Now that we’ve discussed the demand for cash offers in today’s real estate market, let’s explore what they are, who makes them, and their benefits for buyers and sellers.
What is a cash offer, and how common are they?
A cash offer in real estate simply means that the buyer does not finance the purchase with a mortgage. Typically, the buyer has the total sale amount in their bank account and purchases the house with a check or wire transfer.
You might not think that many people have the liquid assets to purchase a home for cash. But, all-cash sales are becoming increasingly popular, accounting for almost 37.2% of single-family home and condo sales in Q3 2024, according to real estate data company ATTOM.
Thanks to cash offers, many buyers were able to win bids and save money on interest. Cash transactions often lead to a quicker closing process, which entices sellers to accept such bids.
If you’re considering buying or selling a home for cash, it’s important to remember that a cash deal doesn’t necessarily negate closing costs. These costs are generally lower in a cash sale than in a traditional sale, but they still need to be covered.
Who makes cash offers in real estate?
Various types of entities make cash offers. The first is pretty simple: a traditional buyer with 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. Additionally, they may have saved or inherited enough money to purchase the home outright.
Aside from the owner-occupant buyer, many direct buyers and iBuyers also 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. HomeLight has one of the largest networks of cash buyers in the country, providing an all-cash offer within 24 hours.
After answering a few short questions, we’ll give you a competitive offer that helps you sell quickly. Since there are no hidden fees or agent commissions and the closing process happens in as little as 10 days, you’ll have the confidence that you’re selling the fastest way for an excellent cash 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 where the buyer needs to finance a mortgage:
- Speedy transaction: This is particularly true when you use HomeLight’s Simple Sale platform, which can help you close in as few as 10 days, not months. Cash sales involving direct buyers, flippers, or iBuyers can dramatically cut down the average selling timeline of 73 days (29 days to attract an offer and 44 days for the buyer to close on a purchase loan).
- 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? However, in some instances, cash buyers pay 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 of Las Vegas, Nevada, 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 significantly increase your chance of selling for top dollar. Plus, the general population is aware of how a great agent can speed up and smooth out the process. 90% of sellers worked with a real estate agent.
Verify Proof of Funds in Cash Transactions
When you’re selling your home to a cash buyer, it’s important to make sure they have the funds to back up their offer. Here’s how you can verify it:
- Request a proof of funds letter: A proof of funds letter from the buyer’s bank or financial institution can assure you that the buyer has the cash available for the deal.
- Check for specifics: Make sure the proof clearly states the buyer has the exact amount available for the home purchase, including closing costs.
- Verify the source: If you’re feeling extra cautious, ask where the funds are coming from, whether it’s from savings, the sale of another property, or another source.
- Trust your gut: If something feels off or the buyer’s proof seems vague, ask for more information or consider other offers.
Why are cash offers great for buyers?
Cash home sales aren’t just great for sellers — they also provide many benefits to homebuyers. The share of homebuyers paying all cash reached 33% through August this year. Non-mortgaged transactions are hardly a thing of the past. However, it’s still 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 instead of dealing with the sometimes months-long traditional sale process.
- No mortgage interest: One huge benefit to paying cash for a home is that you don’t have a monthly mortgage payment. As of writing, the average 30-year fixed mortgage rate from Freddie Mac is 6.6%.
Paying cash for a home can save you money in the long run, since you don’t have to pay elevated interest rates or go through the hassle of refinancing every couple of years when a lower interest rate presents itself.
- Stronger negotiating power: Sellers love cash buyers because there’s no worry about deals falling apart over financing. This gives you some serious bargaining power, helping you score a better price or more favorable terms.
Buying a home for cash can save you money in the short term and the long term. 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.
Make a Cash Offer While Waiting to Sell Your Home
If you’re relying on the sale of your home to make a cash offer, the uncertainty of timing can be stressful and might cause you to miss out on your dream home. Fortunately, it’s possible to buy a new property without waiting for the current one to sell.
HomeLight’s Buy Before You Sell program lets you tap into your home equity and use the funds for a down payment on a new home. With ready cash, you can make a strong offer without the need for a home sale contingency.
As you settle into your new place, you’ll have time to prepare your old home and make it more appealing to buyers, increasing the likelihood of selling for top dollar. Consider HomeLight’s Buy Before You Sell program to make a compelling, cash-backed offer that sellers won’t be able to resist.
Compare your options with an all-cash offer
If you need to sell your home in a matter of days, not months, HomeLight can provide you with an all-cash offer through our online Simple Sale platform. Tell us a bit of information and we’ll provide you with a no-obligation cash offer in as little as 24 hours. It’s quick, easy, and can reduce the stress of a home sale.
Cash offers help both sellers and buyers
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 residence, keep your mind open to a quick and easy cash sale.
Header Image Source: (Anton Marchuk / Unsplash)
- "Heading into the Holidays, Mortgage Rates Increase," FreddieMac (December 2024)
- "Highlights From the Profile of Home Buyers and Sellers," National Association of Realtors (2024)
- "Existing-Home Sales," National Association of Realtors (November 2024)
- "Home Seller Profit Margins Drop Slightly Across U.S. as Housing Market Slows During Third Quarter," ATTOM (October 2024)
- "The Share of All Cash Buyers Highest Since 2014 at 32% of All Buyers," National Association of Realtors (February 2024)
At HomeLight, our vision is a world where every real estate transaction is simple, certain, and satisfying. Therefore, we promote strict editorial integrity in each of our posts.
