It’s definitely a seller’s market in Massachusetts right now. With multiple offers being commonplace, sellers normally have their pick of buyers. One of the many considerations is mortgage versus cash buyers in MA real estate transactions. What are the benefits of a cash buyers? And what should you know as a home seller? Here are a few things to keep in mind.
Net Earnings and Cash at Closing
No matter what type of buyer you go with, as a seller, you receive the same amount of cash at closing. It’s merely a matter of whether that cash comes from a buyer’s own funds or from a mortgage company. Sellers don’t occur any added costs based on a buyer’s financing. Thus, there truly is no difference from that perspective. So why are cash buyers more appealing? It has to do with everything that takes place between offer acceptance and closing.
How the Process Varies
There are 2 key differences between mortgage versus cash buyers in MA: appraisal impact and mortgage delays or potential for denial.
Appraisal Value
Mortgage companies will require an appraisal to justify the purchase price (since they are loaning money against that amount). In hot markets where prices are steadily rising, it’s possible that the appraisal may come in low. In that case, buyers may attempt to renegotiate price. With a cash buyer, you avoid this entirely.
Mortgage Approval
The need for mortgage approval in order to buy a home makes a buyer with a mortgage more risky than a cash buyer. It can take 3-5 weeks for approval and there is also potential for delays. This is where cash buyers truly have the advantage since they will almost certainly close (and on time).
Comparing Mortgage versus Cash Buyers in MA
It seems like a no-brainer that when presented with mortgage versus cash buyers in MA real estate transactions, sellers are better off going with cash buyers. However, this assumes that the offers are otherwise equal, which is not usually the case. Cash buyers know that they have some leverage and will often offer less than buyers with mortgages. Sellers must weigh that price difference against the benefits of accepting a cash offer. As mentioned above, the seller gets cash at closing regardless. If the price difference is five or ten thousand dollars, is it worth the risk to a seller to go with the buyer who needs a mortgage? Every seller may answer this question differently. Fortunately, in a hot market, when one deal falls through, it’s pretty easy for sellers to quickly find a ready, willing, and able buyer!
