Why would a seller care if it's an "ALL CASH DEAL"?

Asked by Billvojtech, Brooklyn, NY Thu Apr 17, 2014

When you get a mortgage, doesn't the seller just get a check for the full amount at closing? Are they expecting you to show up with a suitcase full of money?

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Natallia Nos…, Agent, New York, NY
Fri Jan 30, 2015
For condos/houses : it's all about the closing time.
When there is no mortgage (financing) involved in the purchase transaction the closing time can be brought down to days (given you have great lawyers and realtor who can speed things up). When going after a cash offer the seller eliminates the risk of the buyer not getting a mortgage for this or another reason and therefore saving himself time (especially if the seller needs to sell the property fast).
For co-ops : banks might not be financing the building for a number of reasons which leaves the seller with no other option but to only look for an all cash buyer.
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My NC Homes…, Agent, Chapel Hill, NC
Sun Jun 1, 2014
Please don't show up at a closing with cash, you'll freak everyone out. A cash buyer can close more quickly, the seller doesn't have to worry about lender related issues and in some cases the buyers may not get an appraisal, though as a buyer broker I do encourage my buyers who are paying cash to still get an appraisal and in fact I think it's the most accurate appraisal situation in that the appraiser won't be given the sales contract and will do a "blind" appraisal
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Billvojtech, Home Buyer, Brooklyn, NY
Sat May 31, 2014
The other reason that I've found is if the co-op has a high flip tax, no bank will give a mortgage.
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Joseph Runfo…, Agent, Staten Island, NY
Sun Apr 20, 2014
Yes. No. A seller would care because he/she can close quickly - the mortgage approval process takes longer these days—an average of 45 days, furthermore the hassles and paperwork involved with getting a mortgage can be avoided.
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Bill Eckler, Agent, Venice, FL
Fri Apr 18, 2014

The difference between a cash and financed deal is that a financed deal brings with it a much higher degree of "risk." With a financed option, the lender can deny funding right up to the contract closing date.

What does this mean to a seller? For one thing they have lost a sale and for another, they have had their property off the market for a period of time without an opportunity to sell it. Sellers will likely consider financed transactions but would much prefer a cash deal....same money in the end but much less risk!

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Kathryn Lilly, Agent, New York, NY
Fri Apr 18, 2014
If you are asking the seller for a mortgage contingency, it is not "All CASH". The seller is taking the building off the market hoping that you can get a mortgage. If the house appraises incorrectly,or that the Bank does not find other issues that need "correcting" etc.
In Brooklyn the market is moving so fast, many appraisers cannot get the appraisal to the right number to get the mortgage needed. Maybe there are a few minor issues come up on your credit report at the last minute....the seller has to Waite to see if you &/or the building can get a mortgage.
If you are in a neighborhood where there are many cash buyers, and there are many at this time, it is obviously easier for the seller to accept an offer that can close without waiting for a decision from a Bank.
A Mortgage pre-approval does not prove that you can get a mortgage on this particular house at the contract price. There are many deals that are subject to a mortgage that do not appraise for the right number. I have seen them come back on the market and they sell for more the next time, within a month of being under appraised!

I hope this helps answer your question.

Kathryn Lilly, Broker
Realty on the Greene, LLC
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Annette Law…, Agent, Palm Harbor, FL
Thu Apr 17, 2014
you are right, at the closing table, it all cash.
Too often the "All Cash" deal has a proof of funds from "Liberty Investments, LLC' assuring the seller the funds are avaialble. It is more often a smoke screen for, "Third party approval required before funds are released." So. "All Cash' can be code for invester looking for assingment.

Then there's the FULL PRICE offer from a buyer packing paper from Wells Fargo state this buyer is approved. Then Wells Fargo's apppraisal ends of 30% short. The buyer comes up with more cash or the seller drops the price or another solution is used. Then, 4 days before closing, Wells Fago 'finds something in the buyer history (or the loan is outside their lending ratio) and the loan is denied.

As you see, both present risk.
That is why many choose to hire a professional who knows how to squeeze and determine the real buyers from the pretend buyers. Yep, that cash offer would get kicked to the curb. Same with Wells Fargo.

Now the all cash deal with a proof of funds from Brooklyn Progressive Credit Union would be quite a different story. This a seller WILL prefer.

Buy the way, there is only one way to buy a home with a suitcase full of money. Take care you don't end up IN the suitcase.
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Randy Stoker, Agent, Carmichael, CA
Thu Apr 17, 2014
All cash offers are normally quick and easy. Most cash transactions don't require an appraisal or inspections and the buyer wants to close escrow quickly. What more could a seller want?
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Dan Tabit, Agent, Issaquah, WA
Thu Apr 17, 2014
Cindy is correct, it's about certainty. Mortgages have gone from very tough to just tough and some sellers have had horror stories about supposedly "pre-approved" buyers getting a decline at the last minute.
If you're in a competitive bid situation sometimes price will take second place over certainty. What you can do is improve the strength of your pre-approval. As a former lender I know the difference when I get a pre-approval letter that is based strictly on the application and a credit report (this is a bare minimum) and a strong pre-approval based on review of everything, income, assets, credit and employment. The latter pre-approval is subject only to Title & Appraisal.
If you don't have that type of pre-approval ask your lender to provide it or get another lender.
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Ryan & Dale…, Agent, Westlake Village, CA
Thu Apr 17, 2014
Cash is King. You will receive the same amount of money as the "seller" but there are many benefits. Most of the time the buyer will not require an appraisal which is one less contingency to worry about as well as going through the whole loan process. Loans can be very tricky and some of the time will not go through at the last second. Also cash deals can happen in a matter of days were a loan usually takes 30 days.

No suit case of money is required money will be transferred into the "sellers" bank account the day before the close of escrow. Hope this helps.
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Cindy Turcot…, Agent, Nashua, NH
Thu Apr 17, 2014
A cash deal is certain. If someone is purchasing and taking out a mortgage they could run into a problem with financing if they had a change in employment or if the appraisal didn't come in at the contract price.
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There are a lot of great answers to this question. To add, from my experience, just make sure the "cash" is really there. Sometimes the cash investors, are buying as much as they want as opposed to what they can. Have your agent and attorney due their due diligence to make sure the deal will close.
Flag Sun Apr 20, 2014
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