11 Ways To Make a Cash Offer On a House? Even Without Cash
What You Will Read In This Article
Making a cash offer is one of the best ways to get attention from a seller, especially in a competitive market. However, what qualifies as a cash offer, and what’s the best way to make one? Here’s what you should know about this process.
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What Is a Cash Offer?
A cash offer is a bid on a house where the buyer does not want to get a mortgage or go through any other lending process to get the property. Instead, they’re able to pay the total amount with money they have on hand (or at least money they’ll get after selling their existing property).
There are several advantages to cash offers, which we’ll discuss in a few moments. Many companies have non-mortgage ways of helping with this process, and they’re a good option if you can’t pay in full on the exact day you want to.
Cash offers are excellent for both sides, but they do have a few drawbacks to know about. One obvious limitation is that they immediately tie up a lot of the buyer’s liquidity into a single asset that’s hard to quickly get rid of. Some people might do better with a mortgage even if they can afford to buy the property outright, especially if they want to invest that cash.
Cash offers also lack some tax deductions, especially those related to mortgages. There are cases where taking out a mortgage may result in saving money, though you’ll need an accountant to tell if that applies in any particular situation.
Today, cash offers make up about a quarter of all home sales, mainly because you need to have so much cash on hand to do one. People tend to get mortgages for their first property, but might be able to start making cash offers once they sell that first house.
Why Sellers Like Cash Offers So Much
Here are the main reasons sellers love seeing a cash offer on a house.
No-hassle escrow process
Going through escrow is generally faster when you’re making a cash offer. Lenders can drag things out for various reasons, but if you have the cash, you can put it straight into the escrow account. The most obvious and immediate benefit of this is proving you have the money available to complete the transaction.
With mortgages and similar loans, escrow can take up to 60 days or even longer for particularly complex cases. A cash offer can cut weeks off the time it takes to go through escrow, which means the seller gets their money faster and can make their purchase sooner.
In short, a cash offer can be the difference between the seller getting the property they’re dreaming about or having to settle for something less. This alone is a powerful motivation for them to take cash bids seriously.
A Sure, Fast Closing
Alongside the lack of hassle in escrow is the ability for a quick and certain close. Mortgages can require weeks for a buyer to get approval and gain access to their funds, during which a seller is stuck waiting to find out if the buyer can come through. That’s annoying even in the best of times.
Cash offers close faster because escrow can get the money faster. The time frame varies, but where a mortgage can take up to 60 days, cash offers usually can close in 10 at most, and usually sooner. The time between is usually finalizing things, performing any last-minute repairs, and otherwise confirming that both parties are ready to close.
Cash offers have fewer contingencies than loans, which is another reason they’re easier for both buyers and sellers.
No Mortgage Contingency
A mortgage contingency is a part of real estate contracts on the buyer’s side that allows them to get their money back without penalty if they’re unable to get a mortgage and close on the deal. Sellers want to keep as much money as possible, but they can’t spend any money they get until a deal closes because they might have to return it.
Cash offers already have the money available, so there’s no need for mortgage contingencies. Sellers get all of their money as soon as the deal closes, and that’s the end of it.
There’s a good chance that any potential buyer will get an appraisal, but mortgages often involve a second appraisal from the bank, under its terms, to investigate the property. Appraisals can add days or even weeks to how long it takes to close on a property, so avoiding it is a significant benefit for sellers.
Possibly avoid lender required repairs
Sometimes banks and other lending institutions demand certain repairs before they’re willing to loan out money. This is mainly to help protect the property, but their required repairs aren’t always necessary to the buyer. Avoiding these kinds of repairs can help sellers keep more of their money, which is another perk.
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11 Companies That Can Help You Make a Cash Offer
Here are eleven companies that make it easier to offer cash for a home. These companies function differently from each other, so some will be better in specific situations than others.
One thing to be aware of when using a cash offer company is that while all of the ones on this list are highly-rated overall by customers, people occasionally have issues with specific agents. That’s true of all real estate agent companies, not just cash offer businesses, so make sure to talk with your agent and back out quickly if you don’t like them.
Opendoor is a digital home-buying agency based in California and operating in select cities. They mainly focus on urbanized areas, including many state capitals across the country. Unlike some other cash-focused companies, Opendoor also works with lenders to help buy homes.
One of Opendoor’s standout features is its willingness to purchase homes for you if you can’t close when you want to. Issues closing are an unfortunate reality in real estate, especially if you’re waiting on someone else who’s waiting to sell their home to somebody trying to sell their own, on and on in a long chain of purchasing.
With their current services, Opendoor will hold a home for up to 120 days at no cost, then start charging. They can also buy a home outright and sell it back to you at the same price. A general lack of appraisals and overall loan contingencies helps support offers even more.
Opendoor offers loans and works with lenders, so it’s possible to make a cash offer to the seller while still getting a mortgage. This is a great way to take advantage of a cash offer’s appeal without having that much cash on hand. Opendoor’s focus on limited markets means they’re able to avoid a lot of risk on their end, too.
The general opinion of Opendoor is positive, with Reviews.io giving a score of 4.39/5 after 2171 reviews at the time we checked. Most people report positive experiences, especially for selling homes through them, but a few reviews note that they can be difficult to contact at times. That’s not rare among digital sellers, but it’s worth noting.
Overall, Opendoor stands out as a company that focuses on both buying and selling. However, they lean towards buying from people and then reselling later, so people looking to make cash offers should consider the other options on this list before deciding which one is the best fit.
Reali is a California-focused cash company. While they operate a loan company in more than a dozen other states, their primary services are only available in California, which has a famously competitive market. As they point out, the competition alone means every advantage you can get is a good one.
Reali’s strategy is fronting the cash to help you buy property in California, and they claim offers can close as much as 8% below the asking price. That won’t be true every time, but they have the data on their site to back it up. Their normal fee for the cash service is 0.5% of the home’s purchase price, but they’ll give you an identical credit if you use their loan company.
As a side option, Reali can purchase a home and charge rent until you buy the home properly. Most people don’t remain in this position for long, but if you particularly love a property and need a little more time to gather the funds you need, they’ll often consider the option.
Reali works with all properties listed on the MLS in their operating areas, which is most of the market in California. They also have a Buy Before You Sell program, where they’ll buy a house you want with a cash offer and let you move in. They’ll help sell your old home, and you can use the profits from that to purchase your new home without any new markups.
Reali is generally popular among customers, but you shouldn’t expect personalized service. Their agents tend to work with significantly more clients than regular realtors thanks to their streamlined process, and that means they can’t spend as much time addressing any unique needs you have.
The other obvious limitation is that they only operate in California, so there’s no point in bothering with Reali if you’re buying or selling elsewhere. Reali may expand in the future, but for now, that’s a hard limit on their services.
Accept.inc is a competitively-priced cash service. Like Reali, they’re somewhat state-limited, and that can affect whether you’re able to use them. They have a multi-part system for enabling cash offers.
Customers who qualify for Accept’s Express Cash Approval program can usually start making cash offers within 24 hours, and usually less. If that doesn’t work, Accept can still provide a pre-approval letter, which means you can start looking around and make a regular offer. If you’re approved for a cash offer later, you can change to offering that and boost your odds of winning.
Accept offers generally reasonable rates, with most of their profit coming from loan origination services. One thing that sets them apart from other businesses is that they offer their agents a flat salary instead of using a commission model, so they can provide cash offer services at no extra cost to buyers.
By their numbers, cash offers often get a 3-4% discount on the overall purchase price, even with no competition for the house. That makes it worth trying to buy with a cash offer, and if you’re getting a loan through them, they can close in about ten days. However, you can’t move into the property until it closes, so keep that in mind before you go shopping.
Accept is smaller than some other cash offer services, but they also operate in some less-popular markets like Colorado. That means they don’t have quite as many reviews as some other companies, but reviewers on Google generally approve, giving them a 4.9/5 after 82 reviews.
While the reviews we checked were positive overall, we noticed a few people saying that Accept didn’t always explain the process as well as they could have, especially because they need a lot of paperwork. This didn’t stop deals from closing fine, but it’s worth noting. Overall, Accept is worth considering if you’re trying to buy in one of its markets.
Homeward is a dual-focus company with two primary services: buying with cash, or buying before you sell. As an agent-led company, they do some things differently than other cash offer companies, including the option to pick your agent. Most other companies either assign you an agent or give you a small list to choose from.
Homeward also aims to avoid the issues that come with the pre-approval process, focusing on fully qualifying clients instead. You’re also able to move in as soon as they close on the deal, with a more flexible timeline than many other services.
One point where Homeward stands out is their guaranteed-sale policy. Buyers need to qualify for this program, but that’s not a very big caveat because most people will do so. The simple premise of the program is that if the house doesn’t sell within six months, they’ll buy it themselves.
Most people probably don’t need that benefit, but for uncertain properties or families who need to move out at an odd time of year, it can be a great fallback plan.
Despite Homeward’s quality, it’s still relatively unknown compared to some other cash offer companies. However, it does have about 160 reviews on Trustpilot, with an average of 4.6/5. Many customers cited an excellent experience with Homeward, although a few mentioned a lack of communication. This was rare, though, and suggests isolated incidents.
Homeward’s profit comes from fees, which you can usually roll into a mortgage. They’ll also charge rent if they have to hold the house for you, but this is prorated per day and deferred until closing, so you can often pay it off right away. Overall, though not the largest company, they have excellent coverage and more flexibility than many competitors.
5. Homie Cash
Homie Cash is a mortgage-focused cash offer company, which means they mainly work with people who need a mortgage but want to use a cash offer to increase the odds of getting a property. It’s currently available in just a few states in the western part of the country, including Arizona, Colorado, Idaho, Nevada, and Utah.
However, they can be a little slower than other cash offer companies, advertising that they can complete things in about 21 days. Much of this has to do with their focus on mortgages, as they want to get that going so you can start repaying them for the loan.
As with most mortgage-focused companies, Homie Cash starts with a pre-approval process. Assuming you pass that, and most people ready to buy a house do, you’re able to start making offers on homes.
However, unlike some other companies, they’re not a buyer. That is, they don’t purchase any homes themselves, choosing instead to focus entirely on loans and helping buyers. This helps reduce many of the fees involved, especially because they also help with paperwork and minimize the chance for errors during the process.
Reviews of Homie Cash are a little hard to come by since they’re a smaller company, but many users describe their experience with the company in reviews for their app, which may also reflect the demographics of their customers. The overall opinion on the Apple app store is 4.4/5 with 203 ratings.
Homie Cash is a decent choice if you’re looking to get a mortgage and buy with cash. They offer some help with selling, including a flat listing fee, but they don’t specialize in this area. That makes them more worthwhile if you’re already working with someone to sell.
Better Cash Offer is a mortgage-focused cash offer company that focuses on urban markets. They operate in cities around the country, though with a concentration around Maryland, New Jersey, and Virginia.
Better is strictly a purchasing company. While they may temporarily buy a house and hold on to it until you move in and buy it back from them, their goal isn’t to acquire and sell property independently as some other companies do. They primarily make their money through loans and mortgages, with additional fees if you use a different lender.
Otherwise, their process is largely straightforward, with the ability to start making offers once you get pre-approval from them. They also allow you to move in as soon as they close on the sale, including while they finalize your mortgage. That can let you move in a little sooner than some competitors, helping avoid the need for multiple moves.
Better requires an earnest money deposit of 5% when making offers, although it’s not a fee. Rather, the full amount is applied as a credit when you close, but it does mean you’ll need to gather at least that much cash on hand if you want to use their program.
Reviews are a bit limited, but Credit Karma has a decent number, rating them 4.2/5 after 950 member reviews. Most people had a good experience, but a few people reported delays in approval or issues finding loans that met their needs.
7. Ribbon Home
Ribbon Home is a buying and selling service operating mainly in the southeastern part of the United States. Like most cash offer services, they help purchase a home first, then rent it out to the owner until financing is complete. They focus specifically on mortgage-eligible buyers, which is a little more limited than some other companies.
Ribbon also has strict limits on the types of homes they help with. Specifically, they deal with condos, townhomes, and single-family homes that cost between $150,000 and $700,000, on four acres of property at most, and either built after 1974 or fully renovated since then. They do not support manufactured, modular, foreclosed, or short-sale homes.
Limits on style, age, and construction mean that Ribbon has a much narrower focus than many of its competitors. However, this also provides them with more consistency in their offers because their market is predictable, and they claim a 100% on-time closing rate with a guaranteed close after the inspection period.
Customer reviews are mostly positive, with Trustpilot rating them 4/5 after 91 reviews. About three-quarters of reviewers there had a great experience, while seven percent were unsatisfied. Several people indicated that it could be hard to reach agents and that Ribbon may need more staff, although anyone who got a good agent seemed happy with the process.
HomeLight is a cash offer company that both buys and sells property. They operate mainly in Arizona, California, Colorado, Florida, and Texas, and advertise that they can close on a property in as little as 8 days. They also have a commitment to a 21-day closing at most, which is faster than many of their competitors.
HomeLight focuses on immediate purchases, but they’re also willing to purchase a home on your behalf and resell it to you at the same price if you meet the conditions for their program. They also offer a cash offer express program, though this has a 1% fee in most states or 1.5% in Florida.
HomeLight has agents in its primary areas, but it’s also willing to certify existing agents and help bring them into its program. That adds a level of flexibility most other cash offer companies lack, and they generally avoid the preapproval process to help ensure you can get the property you want.
HomeLight’s guaranteed closing commitment is their real strength. Their overall process is similar to other companies on this list and doesn’t stand out in other ways, but their willingness to ensure you can close on a specific time frame no matter what adds an extra level of certainty.
Public opinion marks them as competitively good, with a 4.5/5 rating after 208 reviews on Sitejabber. However, some people did mention that they got more calls and emails about selling than they expected. Most people were satisfied with finding agents through Homelight, but individual experiences do vary there.
Flyhomes is a buying-focused company, set up to let you pay on an offer in at little as 10 days. That’s a bit slower than some of the other options on this list, although it’s still fast enough to satisfy most sellers. Their overall process is also a little different than what many other companies choose.
Flyhomes starts most relationships with customers by using a pre-underwriting process to help qualify you. Once that’s ready, you have access to a short-term loan so you can pay in cash yourself, rather than having the company do it for you. After you move in, the short-term loan converts to a long-term one, becoming a mortgage.
Flyhomes is moderately flexible, giving you up to three months to find a different lender if you decide you don’t want to use them. Some companies won’t let you get a mortgage elsewhere without going through a lot of hoops, so the added flexibility can be nice.
They also offer a relatively rare guarantee, which is that they’ll resell the home if you’re unsatisfied for any reason within one year of purchase. Most people won’t use this, but if you uncover a major flaw in the house that wasn’t apparent until you moved in, it’s extra security. They’ll also buy the home if you have to back out after the seller accepts the offer.
Flyhomes buys some properties directly, including purchasing houses themselves after 180 days if you don’t get an offer you like. They’ll buy it after 30 days for an additional 1%.
Customers are extremely satisfied with Flyhomes, giving them 5/5 after 263 reviews on Yelp. We did read a few negative reviews, but Flyhomes has a consistently higher customer rating than most of their competitors, making them a good first choice to consider. Unfortunately, their relatively limited area of operations limits who can use their services.
Knock offers both buying and selling services, with a slight focus on convincing people to both through them thanks to generous perks. Notably, people who both buy and sell through them can get up to $25,000 in help for listing preparation, even when selling the old house after purchasing the new one.
Knock stands out from other cash offer companies with its willingness to do non-contingent offers, which means you don’t have to sell your current home to buy the new one. They also offer a 30-day guarantee on closing, with a $5000 payment to you if they’re unable to hold to that.
30 days for closing is relatively slow for a cash offer company, which can make them a little less appealing to sellers. However, it’s still faster than a traditional sale, and their buy-before-you-sell setup helps avoid the awkwardness of multiple moves or being between homes for a few weeks.
Customer reception is generally positive, with a rating of 4.8/5 after 719 reviews on Zillow. Several reviews cited happiness with quick responses from agents and clarity in the process, though an occasional review cited a poorer interaction with specific agents.
Hard money lenders aren’t traditional cash offer companies, and this doesn’t refer to a specific business like the other options on this list. Instead, a hard money loan is one where you’re backing the funds with your existing property. Unlike many other loans, this doesn’t rely on creditworthiness scores, so you can get one even with a poor credit rating.
Hard money loans are especially useful for real estate, where you can use them to get a significant amount of cash and buy a new property. Most hard money loans last between one and three years, so you have time to prepare and sell the old house after moving into the new one.
Hard money loans are also available relatively fast, so you can get them on comparatively short notice. Interest rates tend to be higher than for other loans, though, which is an incentive to pay them back as quickly as possible.
Hard money lenders aren’t for everyone, and they don’t come with the benefits of cash offer companies (such as access to real estate agents or help with paperwork). However, if you prefer doing things yourself and you can tolerate the risk of not repaying quickly enough, hard money loans are a practical and accessible way to make a cash offer on a house.
Can You Make a Lowball Offer?
No, you should still be competitive when you’re making a cash offer. A seller might be willing to accept a slightly lower offer for the sake of getting their money faster, but the difference is usually a few thousand dollars at most and not truly significant for the property’s overall value.
Cash offers are appealing, but they’re not so good that you can significantly underbid anyone else and expect to win. Given the choice between a fast cash offer and a slower but noticeably better option, most sellers will take the slow option. If the offers are similar, though, they’ll usually take the cash bid instead.
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About the Author: Kris Lippi is the owner of ISoldMyHouse.com, the broker of Get LISTED Realty and an official member of the Forbes Real Estate Council. He actively writes about real estate related topics such as buying and selling homes, how-to guides for around the house and home product recommendations. He has been featured in Inman, Readers Digest, Fox News, American Express, Fit Small Business, Policy Genius, Lending Tree, GoDaddy, Manta as well as other major websites. Read more about us here.