Suppose I’m selling my house for $800k in California. I have a buyer with a traditional financing arrangement (30 year loan) and a cash buyer. As the seller, I get my money regardless of whether a bank pays me or an individual cash buyer. Why do people get excited over the cash buyer?
In: Economics
Real estate contracts do not become firm until a few things happen:
1. A time period for inspections, attorney review, etc passes. This is usually a few weeks.
2. The financing deadline. This is usually one month or more. If the buyer does not get financing, the buyer can just break the contract and walk away from the deal with no penalty. If a buyer wants to walk away, he can usually manipulate it so the financing falls through and he walks away.
In a cash deal, there is no financing contingency. The contract is a sure thing.
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