June 9, 2023
Buying a house is often a stressful process involving many decisions and complex stages, including negotiations, home inspections, loan approvals, and much more. Traditional methods of house buying, like using Multiple Listing Service (MLS) listings, come with contingencies that can lead to potential roadblocks, delays, or even a collapse in the deal. On the other hand, cash home buyers can sidestep many of these issues, offering a streamlined and efficient process that significantly reduces the duration of the property transaction. Here's how cash home buyers manage to avoid common contingency roadblocks compared to traditional MLS listings. No Financing Contingency A financing contingency is a clause that protects buyers who plan to pay for the property with a loan or mortgage. This contingency states that the deal is conditional on the buyer being able to secure necessary financing from a bank or other lending institution. If the buyer is unable to secure the loan, they can walk away from the deal without losing their earnest money. However, this contingency can often delay the closing process, as the buyer must wait for loan approval. Conversely, cash buyers don't require any financing. They have the full purchase amount available, making it unnecessary to wait for loan approval. As a result, they can remove the financing contingency from the equation altogether, thereby significantly speeding up the transaction and removing a potential deal-breaker. No Appraisal Contingency Another common contingency in MLS listings is the appraisal contingency. This clause protects the buyer, and by extension, the lending institution, by stipulating that the property must appraise for at least the selling price. If the appraised value falls short of the agreed-upon price, the buyer can renegotiate the price or cancel the deal altogether. Cash home buyers, not needing a mortgage, often skip the appraisal or accept a more flexible, independent evaluation of the property. This avoids the potential issue of a lower-than-expected appraisal disrupting the transaction process. No Home Inspection Contingency In traditional property transactions, a home inspection contingency is common. This clause allows buyers to have the property inspected and, based on the results, renegotiate or withdraw from the deal if significant issues are discovered. While an inspection is generally a prudent step, it can create a hurdle in the transaction process and potentially lead to disagreements about required repairs or price adjustments. Cash home buyers, on the other hand, usually buy properties "as is," meaning they accept the property in its current condition. Although many cash buyers still opt for an inspection for their peace of mind, they typically don't use it as a bargaining chip to negotiate the price down, eliminating another possible roadblock in the transaction. No Sale Contingency A sale contingency is common in situations where the buyer needs to sell their current home to finance the purchase of a new one. If they can't sell their existing property within a specified time frame, they can back out of the deal. This contingency puts the seller in a precarious position and may delay the transaction. Cash buyers, by definition, don't need to sell another property to finance the purchase, so this contingency doesn't apply, making the transaction much smoother and more predictable. Speed and Certainty of Sale All these points culminate in two significant benefits of cash buyers: speed and certainty of sale. Without the need for contingencies, cash transactions can proceed much faster, often closing in a matter of days compared to the weeks or even months it might take for a financed deal. Moreover, cash buyers remove much of the uncertainty surrounding property transactions. There's no risk of the deal falling through due to financing issues, low appraisals, or failed inspections. Cash home buyers can avoid numerous contingency roadblocks inherent in traditional property transactions, particularly those found in MLS listings. By eliminating financing, appraisal, home inspection, and sale contingencies, cash buyers can expedite the property transaction process and provide a seamless, stress-free experience for sellers. As the real estate market evolves, cash buying is a strategy that offers distinct advantages by avoiding common roadblocks. You should always learn as much as you can about a home-buying company before you sell your home to them. Click here to learn about Joe Homebuyer of Dallas today!