What is the difference between a cash offer or a mortgage offer? Doesn't the seller get the money anyway?

Asked by Ivette Fernandez, Wed Oct 24, 2012

I called a RE agent today who told me (his words) Don't waste your time because I have cash offers.

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Javier Menes…, Mortgage Broker Or Lender, Melville, NY
Wed Oct 24, 2012
Hello Ivette. There is actually a huge difference between a cash offer or a mortgage offer. For a seller, a cash offer is much stronger. Why? Well with a cash offer you can request proof of funds upfront and verify that the buyer has the cash available to close on the transaction. This is as close to a guarranteed closing as it can get. But in a offer were the buyer is applying for a mortgage, not the seller or the buyer know for sure that the bank is going to approve that buyer's loan. There are so many things that can lead to the mortgage being denied, things that at times cannot be predicted at the beginning by the parties involved.

Javier Meneses
NMLS #23130
Senior Loan Officer
Sterling National Bank
3 votes
Then why is it I must get a pre-APPROVAL letter from the bank or mortgage company before even looking for a house? Would it be that some houses are questionable and won't support the sale price? or that it's an old mobile home which loan companies don't lend on? Otherwise, cash up front or cash is 30 days is still cash. Must be more too it than that? Not all these buyers can't get a loan, it's the house that can't be loaned on in my opinion. Expect a better answer from you, a professional. How do I know, because I'm looking to buy and some houses just wont't qualify.
Flag Sun Nov 20, 2016
Hi Javier, can a buyer not wait until he is approved for the mortgage loan first before looking for a house or does he have to find the home first?
Flag Mon Jun 20, 2016
Anna M Brocco, Agent, Williston Park, NY
Wed Oct 24, 2012
Yes, the owner gets paid regardless the method of payment; however cash offers tend to close quickly, oftentimes no appraisal, sometimes no home inspection is conducted, etc. If looking to purchase in the near future consider an agent of your own....
3 votes
Gail Gladsto…, Agent, 11743, NY
Wed Oct 24, 2012
Several differences and the biggest one is that there is no guarantee the buyer will actually get the mortgage commitment. Once you are in contract, the home for sale is no longer visible as being available. The seller is effectively "off the market" until the buyer gets a commitment.

If the buyer is turned down, the seller has to begin all over again marketing their property.

All of the buyers my agency works with are assisted in getting a conditional commitment before we even work with them; effectively, we make them into cash buyers.

Cash is King.
1 vote
Gina Lollo, Agent, Setauket, NY
Wed Oct 24, 2012
For the seller, a cash offer is much stronger than an offer that is contingent on the buyer being approved for a mortgage. This usually benefits the seller since it will most likely be a quicker closing with less chance on the deal falling through.

Hope this helps...
Good luck

Gina Lollo, MA
Certified Buyers Agent
Short Sale Specialist
Gladstone Group
(631) 335-7078
Ginalollo@northshoreproperties.org http://www.threevillagehomesny.com
1 vote
De Vonte Wil…, Agent, East Point, GA
Wed Oct 24, 2012
Good Afternoon Ivette. Great Question. Simply put; A cash offer is an offer that appears much stronger because it is not contingent upon the buyer obtaining financing. Whereas an offer with a mortgage clause is a contingency, meaning that the offer is subject to the buyer obtaining financing. Therefore, A cash offer eliminates that contingency, which may make the difference between the seller selling their home or not.

I hope this answered your question! If you have any further questions, please feel free to contact me by the ways below.

Wishing you all the best,

De Vonte Williamson
Licensed Real Estate Salesperson
Proudly Serving Long Island
Coldwell Banker Residential
Mobile: (631)384-3695
"I Stand Behind Getting You Results!
1 vote
Thomas Brady, Agent, Plainview, NY
Wed Oct 24, 2012
Hi Ivette. You should get a buyer's agent to work for you. They should be paid by the seller but would be working for you. A buyer's agent can guide you on offers and can make sure that your offer is submitted. They can give you expert advice, so you don't overpay and can answer your questions exactly, not in a general form like here on Trulia. As Javier and Anna said, a cash offer is stronger because there is little chance of it not going through, where as a mortgage is an iffy proposition.
Licensed Real Estate Salesperson
Notary Public, Retired N.Y.P.D. Lt.
#1 Listing & Selling Brokerage in NY
Charles Rutenberg Realty, Inc.
255 Executive Drive - Suite 104
Plainview, New York 11803
1 vote
Yubelly Sant…, Agent, Bayside, NY
Thu Mar 7, 2013
The difference is time and certainty. The CASH OFFER is faster and stronger , the buyer has the money in the bank. If the Seller likes the offer the buyer is ready to sign contract and go to closing right away, if there is not an inspection or something else. Really faster, like a month.
In the MORTGAGE OFFER the buyer could be pre-approved or not, still he has to do the papers with the bank, then wait for the appraisal at least a week or more to see if the value is want the seller is asking for. Sometimes the appraisal coincide with the price, and sometimes is no deal because the loan is not approve or in the case of pre-approved buyer the appraisal is lower to what the Seller is asking for.
0 votes
Victoria Pop…, Agent, Bayside, NY
Sat Oct 27, 2012
Consider this Ivette: if you would receive offers of cash and credit for something you're selling, what would you accept first?
Cash, of course!!
Same analogy for selling a home...
0 votes
Jerry Cibuls…, Agent, Southold, NY
Fri Oct 26, 2012
A cash offer has less risk to the seller on closing. A mortgage comes with a contingency. The seller has to wait as the purchaser works through the mortgage process. The house has to appraise and the bank has to clear the applicants file to close. The credit history, assets, employment, tax returns etc all have to be reviewed on the home buyer. This extra risk is less attractive than a cash buyer for many home sellers. Cash can close faster in some cases than a mortgage. You should always enter an offer and let the seller review your terms and contingencies.
0 votes
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