All Cash Offer: Buyers, without a lender, with sufficient funds of their own to buy the property. No contingencies or delays associated when purchasing with a mortgage loan.
- Doesn't always increase the chance of an accepted offer.
- You cannot change from all cash to financing later on.
- Agreement of sale to purchase a property is binding contract, Once executed, the contract cannot be changed by either party without other's consent.
- Sellers will accept a lower than listing cash offer because they believe it will make for a quicker closing.
- If buyer changed from all cash to a mortgage contingency, the seller may refuse to make the change, keep the buyers deposit because of the breach of contract, and move on the another buyer.
Financing: If a buyer can't pay cash, they have several options
- Conventional Loans- Borrow from conventional lender, like a bank. A bank loan will likely be one of the least expensive types of financing, but a bank loan will require a large down payment by buyer and be subject to significant underwriting and delays.
- Government Loans- Relatively inexpensive, and have significant limitations and rules. You must be able to live within the strict rules.
- Hard Money Loans- From lender who doesn't require borrowers ability to repay loan and make payments along the way. Evaluate loan based on the collateral. They will generally lend less than other sort of lenders so they're confident they will be
repaid in full.
- Private Loan- Underwrite looking at 3 C's: credit, capacity, and collateral. See's what buyer can afford, and the likelihood of repaying it. They don't want to foreclose on a collateral property. Be paid interest and paid off to terms of loan.