Cash offer on a house vs. listing

A cash offer almost never beats a good listing on top-line price. That is not the point. The point is what you keep, when you keep it, and what you are willing to trade to get there. Here is how to run the numbers for your own home in about ten minutes.

The two paths, priced out

Path A: Institutional cash offer

• Offer price: typically 5 to 15 percent below open-market value, depending on condition and market softness.
• Service fee: 5 to 12 percent, disclosed up front, deducted at close.
• Repairs: after inspection, the buyer usually asks for a credit for major items. Expect 1 to 3 percent for a normal home.
• Closing costs to seller: standard title, escrow, transfer tax. 1 to 2 percent in most states.
• Time to cash: 7 to 21 days from acceptance. No showings, no staging.

Path B: Traditional listing with an agent

• Sale price: whatever the market will pay on the open market, minus normal negotiation.
• Commission: 4.5 to 6 percent combined, negotiable and increasingly so after 2024.
• Concessions to buyer: 0 to 3 percent in a normal market, higher when rates are high.
• Prep and staging: 500 to 15,000 dollars, wildly variable.
• Carrying cost: mortgage, taxes, utilities, insurance. Every month on market is real money.
• Time to cash: 30 to 90 days on market plus 30 to 45 days to close.

Worked example

A hypothetical home fair-market-valued at 500,000 dollars, in normal condition, in a normal market.

Cash path

• Offer: 450,000 (10 percent below fair value)
• Service fee at 8 percent: minus 36,000
• Repair credit: minus 7,500
• Closing costs at 1.5 percent: minus 6,750
• Net to seller: about 399,750, in your account within three weeks.

Listing path

• Sale price: 500,000
• Commission at 5 percent: minus 25,000
• Concessions at 1.5 percent: minus 7,500
• Prep and staging: minus 4,000
• Closing costs at 1.5 percent: minus 7,500
• Two months of carry at 3,000 per month: minus 6,000
• Net to seller: about 450,000, in your account in roughly three months.

When cash actually wins

The math flips in a few specific situations. Take cash seriously if any of these apply.

• The home needs work you cannot or will not do, and the discount for condition on the open market would be steeper than the cash offer's built-in haircut.
• You are carrying two mortgages, or the property is vacant. Every month costs you real money.
• You have a hard deadline. Job move, divorce, probate, an offer on your next house that is contingent on this one closing.
• The market is softening quickly and you do not want to guess how much further it falls while you sit on market.
• Privacy matters more than dollars. No sign, no lockbox, no strangers walking through.

The trap to avoid

Do not compare a cash offer against a fantasy listing. Compare it against the number a good agent will realistically defend after two weeks on market. Get one bid and one written listing analysis, then decide.