A buyer who's getting a loan, will have a mortgage contingency in their contract... which means they might have 30 days into the contract, before the seller knows for certain, that the deal is solid. With a true cash offer, the seller will know that the deal is solid, much sooner in the process, probably as soon as the inspection contingency clears.
To some sellers, especially those who've had a deal fall apart due to a seller who was unable to get their loan, that has some value. Yes, sellers all get full-payment at the closing, either way, but only if it closes.
To answer the second question, when a buyer comes in with a significant amount of their own funds, it makes them more serious. It's easy to spend an hour with a real estate agent and write an offer. But if you put some serious money down, you are more interested than just writing up paper... you want that house.
My dad always said, "Nothing is better taken care of than that bought with ones own money".
Cash is cash. There's no question about financing. There's no issue with appraisals. The buyer's credit history doesn't matter. The buyer's other purchases don't matter.
Sellers who want a greater assurance that the deal will go through will put additional weight on an all-cash offer for that reason.
If you don't go with 100% cash, sure, the more in cash, the safer the offer. Not as safe as all cash, but more solid than FHA at 3.5%, for instance.
Hope that helps.
Why does the amount of down payment matter if the buyer is getting financing?
Conventional financing is preferred by sellers because the lender isn't as strict about the condition of the house. Conventional financing requires at least 5% of the sale price as down payment (compared to 3.5% down for FHA). But it's not strictly the amount of the down payment that concerns the seller. His main concern is the likelihood of the sale getting to closing. The chances of closing are higher when the buyer has conventional financing. The size of the down payment may be an indication of the buyer's credit-worthiness, so that might be a clue, although not positive proof that the sale will get to closing.
A full cash offer is preferred because it removes the requirement of an appraisal for lending purposes. With current conditions, there are a lot of times where the appraisal amount does not meet the contracted purchase price which causes more negotiation if the seller proceeds with the sale (they usually have to reduce their sale price). A larger down-payment is appreciated by sellers, however if there is a loan involved, all the lender requirements have to be met. In addition, lenders regulations are extremely controlled now and even very qualified buyers can have difficulty getting a loan. There is risk involved in any real estate transaction for both parties - sellers remove their property from the market for some period of time when it goes under contract, and if the buyers loan gets denied at the last minute, the sellers have lost potential buyers during that time period. Years ago there was a phrase, "Cash is King!" and this phrase is again coming to life.
Simply put, CASH IS KING. There are no financing contingencies to worry about with an all cash offer. Yes, having a larger down payment provides more flexibility in obtaining a loan. For a cash offer, there is only an inspection period as a contingency unless otherwise stipulated.
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Hope this Helps,
That's why 40 or 50% down is "sweeter" in the eyes of the seller.
Paying all cash is the mother lode.........no appraisal to worry about (unless one is requested in the contract)...or lengthy mortgage process to impede the sale.
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