How to Bid On A House with A Cash Offer: The process for making an all-cash offer differs slightly from the process of making a traditional mortgage-contingent offer. First and most obviously, all-cash buyers don’t need to work with a mortgage lender to purchase a home. That means there’s no need to calculate or budget for monthly mortgage payments, so all the typical prep work of getting pre-approved and figuring out how much house you can afford goes out the window. You’ll simply make the offer and, if it gets accepted, go under contract. Keep in mind that you’ll still have to show proof of financial credibility, like a valid recent bank statement, but the documentation requirements are much less extensive. Consolidating the funds into a single account can help streamline this process.
Because all-cash buyers don’t need a mortgage, they do avoid some key lending costs like interest. However, other expenses like property taxes, HOA fees, and homeowner’s insurance will still need to be accounted for, so keep those top of mind when planning out the transaction. Title and escrow services will also need to be secured for the actual transfer of ownership and closing. Because there’s no lender involved, an appraisal isn’t required in all-cash transactions.
No matter what kind of offer you make on a home, working with a real estate agent during the bidding process always has benefits. Agents can help you determine your ideal offer number (which should be partially informed by comparable sales prices in the area), draw up and submit your offer details (including a proposed closing date and inspection contingencies), and negotiate with the seller. If you’re worried about the cost, remember that sellers pay for an agent’s fees so there’s no downside to leveraging this expertise. When everything is finalized, the funds for an all-cash transaction are typically transferred with a cashier’s check or electronically.