Why do home sellers prefer a “cash” buyer? Wouldn’t they get the same amount of $ as a check from the bank if the buyer has a home loan?
In: Other
My wife and I went to buy our house with great credit, a pre-approved loan, and a solid down payment. Then the bank’s initial appraisal came back almost $10k less than our offer. At that point, neither we nor the seller could negotiate. Any cash we had was committed to our down payment and the bank wouldn’t budge. The buyer had to either accept less money or cancel the sale. For a bit, it looked like they were going to walk away and my wife and I would be back to house hunting.
Cash offers aren’t subject to that. There’s no chance of a loan falling through. There’s no chance of an appraisal knocking a chunk off the final price. There’s significantly less paperwork and lawyers and headaches.
It’s part of why homeownership is so inaccessible to first-time homebuyers. If you just sold a home, the equity will significantly lower the cost of your next mortgage or even give you enough money to buy the house outright (especially true for people moving from expensive to more moderately priced markets). If you’re renting, you have no equity and a significantly less impressive down payment even if you’ve been able to set aside money.
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