Cash Offer vs Mortgage

[zenjah]

Hi there,

I am wondering if anyone knows if there is any advantage for a buyer to make a cash offer (i.e. paying full cash for a property) over someone who offers using a combination of cash deposit and mortgage or does it not matter for the seller?

If there are some advantages, what are these and roughly how much are these worth (i.e. can we lower our offer price and by what percentage if we make a cash offer)?

Thanks heaps in advance for your help

[Damap]

If your offer is unconditional, in other words not contingent on finance then it makes no difference tot he seller. You lose your deposit and can be sued if you don't settle either way. It makes a HUGE difference in the USA but not here.

[PTILoveYou]

In NZ, people refer Cash Offers as an offer that is unconditional, ie without specific conditions imposed, such as finance/builders/lim.

Most recently I have sold my old home, and we got a good price, but most importantly, it was unconditional, which is a cash offer, as most real estate agents refer to.

Since there is no finance clause on my contract, I as the seller has no idea if my buyer has a mortgage or not. At the end I don't really care, because I know by settlement date the house will be sold, and I will get my money.


The only way to influence the price if you are paying by full cash would be reduce the settlement period to 2 weeks, or even 1 week if your lawyer is up to it (should be). If the vendor has a real tight deadline to sell, ie need money asap, then they may be willing to reduce their price for the speed.

[zenjah]

Thank you guys - much appreciated for your help. Didn't even realise cash offer means unconditional offer; always thought it just meant paying cash! Guess you do learn something new everyday!

Thanks once again for your help

[Wayne]

Thank you guys - much appreciated for your help. Didn't even realise cash offer means unconditional offer; always thought it just meant paying cash! Guess you do learn something new everyday!

Thanks once again for your help

A cash offer can have other conditions!
They just don't have finance as one.
Having an offer subject to finance creates a big un-known for the vendor.
Having it subject to selling another house is even worse.
Having a cash offer subject to LIM or building report puts it back into known territory - the vendor has some idea on what is in the LIM or how stable the house is - ie they can be surer of a positive outcome.