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The Difference Between A Cash, And No Mortgage Contingency, Offer?

Real estate, and the markets, are historically, cyclical, and how houses are marketed, priced, etc, differ, based on the particular point, in time. In the past couple of years, we have witnessed a strong Sellers Market, for a variety of reasons, including the economy, perceptions, etc. This occurs, when there are more buyers than sellers, and a number of conditions, accompany this. Obviously, the scenario differs, when there is a Buyers Market (more sellers than buyers), or, even, a balanced market. This article will attempt to briefly consider, and discuss, why, in this sellers market, so many buyers, attempt to influence homeowners, by making, so – called, cash offers. Most sellers like this, because there is no mortgage contingency, which generally speeds up. the transaction process, as well as taking one variable, out of the equation. Often, the terms, cash sale, and, no mortgage contingency, become interchangeable, because, both mean, the sale, is not subject to getting a loan. With that in mind, this article will attempt to briefly discuss, examine, and differentiate, between the two scenarios.

1. Cash deal: A true, cash deal, means the buyer is using his own funds, to purchase the house. This is attractive, because it removes an element of risk, as well as, often, shortens the time period, for transaction, to go to closing, and fruition. However, an owner must demand, proof of funds, and have it clearly listed, proven, and described, on the Offer to Purchase. In addition, especially in ever – increasing housing markets, as we have been experiencing, where pricing has escalated at a rapid pace, and appraisals, may not have caught up, the need, for a house, to Comp – out , is not a factor. When one applies for a mortgage, the lending institution often requests a slew of information, which extends the process and period, including, tax and income information, other liabilities, and assets, appraisals, etc.

2. No mortgage contingency: This means, the buyer, cannot cancel, after the contract is signed, because he cannot obtain a mortgage. Although referred to as a cash sale, it is not quite the same, because the deal, can't, often, be closed, as quickly, as in a true, cash sale.

In either scenario, there are advantages to the homeowner, as compared to a conventional sale, where a sale, is contingent upon, getting a mortgage. Wise sellers know, and understand the difference, and demand, their real estate attorney, word the agreement, as strongly as legally allowable.

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