How valuable are cash offers in residential real estate? As it turns out. . . VERY!
Cash offers do not require appraisals or approval from a lender (and if you have gone through that process recently, you know it can be tedious). This enhances the certainty that a seller will get in the transaction (there are fewer ways for a buyer to back out as there are no appraisal or loan contingencies). Another benefit of a cash offer is that the closing can happen very quickly (within a matter of days). If the buyers have a mortgage, it is common for closings to take at least 30 days with rush closing possible in about 2 weeks, in some situations. A cash buyer is valuable enough that sellers will sometimes take a cash offer (with its greater certainty) over an offer with a mortgage that has a higher price. A cash buyer can often save some money due to the better terms they are able to offer which can provide significant value to a seller. Depending on the list price, this could be $5K-$10K or more. Of course, a cash buyer must provide proof of funds and is usually expected to put up a greater earnest money deposit (sometimes as much as 10% of the purchase price) in order to demonstrate to the seller they are not apt to walk away from the deal down the line.
We surveyed various towns and areas in Metro Chicago to determine which towns have the most cash buyers – here are the results (note that Chicago and suburban Cook County numbers are based on just one month of closed sales instead of 12 months like the other cities).