Two Offers, One Decision: How Sellers Should Choose Between Cash and Contingent Buyers

Receiving two offers on your home can be exciting and difficult at the same time.

After all, it’s up to you, the seller, to decide whose offer to accept.

If you’re debating between a “sure thing” cash buyer or first-time buyer relying on financing, things can get even tougher.  While your net proceeds will be similar, the type of buyer you choose will affect your timeline, risk, and overall selling experience. 

Ultimately, the right decision depends on your unique situation and what you plan to do with the net proceeds.

Pros and cons of a cash buyer

The most noteworthy benefit of a cash buyer has to do with timing.

“They don’t need a mortgage approval, which may take 30 to 45 days or even more. This means they can complete the transaction in as little as 7 to 14 days,” says Sain Rhodes, real estate expert at Clever Offers in Seattle.

If you need to move quickly or don’t want to wait forever for the cash, a cash buyer is a huge plus. There is no lender involved, so you don’t have to worry about the sale falling through due to a low appraisal or last-minute mortgage denial. 

In addition, cash buyers typically impose fewer contingencies than those who finance.

“The buyer is less likely to ask for major repairs after the inspection, making the entire process less complicated and more predictable,” explains Rhodes. 

When it comes to drawbacks, the most significant one is that cash buyers usually believe they’re entitled to a price reduction in exchange for their speed and certainty. It’s not uncommon for these buyers to be investors or flippers who are committed to maximizing their returns and demanding a lot. 

“For example, a conventional buyer might give a $520,000 offer on a $500,000 home, hoping to get their dream house, while a cash buyer might just give a $500,000 offer. You may deprive yourself of a conventional buyer who is emotionally attached to your home as is and willing to pay top dollar,” says Rhodes.

Pros and cons of a conventional (financed) buyer

According to Whitney Dutton, residential sales director and adviser at Native Realty in Fort Lauderdale, FL, conventional offers will almost always sell for more money for two reasons. 

First, financed buyers are risking less cash out of pocket and are, in turn, fine with paying more. Second, the majority of financed buyers are end users, not investors.

“They’re emotionally attached to the property and less focused on getting the best deal,” explains Dutton. 

On the flip side, conventional buyers have to undergo a third-party appraisal.

“If the home does not appraise at the agreed-upon selling price, the buyers can cancel the contract and get a full refund of their deposits,” says Dutton. 

There’s also a financing contingency period. For example, a buyer may have 30 days to get a loan. If they get denied due to their credit, lack of job security, or another reason, they’re entitled to a full refund of their deposit. Then you, the seller, will have to start the selling process from scratch.

Agents weigh in: Which buyer would they choose?

Whether you should go with the cash or conventional buyer depends on your personal situation.

“If you’re buying another home and you need the proceeds from the sale to do so, I would advise you to consider the cash offer as it’s less risky,” says Dutton.

However, if you don’t have any plans for how you’ll use the funds and are more flexible with the closing date, the financed buyer is likely your best bet, especially if your goal is to get as much as you can for your home.

JJ Gorena, real estate agent at eXp Realty LLC in San Antonio, TX, explains that if one of his buyers gets a cash and conventional offer, he suggests they consider two factors: the net amount they’ll receive at closing and their timeline. 

“If a cash offer is more than 5% lower than a financed offer, I feel there is a mitigated risk to take the higher financed offer. Even though the cash buyer can close quicker and theoretically allow for a smoother closing with less red tape, the conventional offer is the way to go as long as timing and property condition isn’t an issue,” explains Gorena. 

Keep in mind that while the sales price is important, it’s only one piece of the puzzle. Dutton finds that many buyers overlook the health of their real estate market.

“If your current market heavily favors the seller, you can take a financed offer with more risk and go after the higher sales price,” he says. 

Other factors to think about include contingencies and how they might affect you as a seller. If you don’t want to deal with extensive repairs or believe it’s unrealistic for you to meet the timelines in place, the cash buyer is likely a better option.