A Guide to Cash Offers

We all know the market is super competitive right now! Inventory continues to remain low and buyer demand is high. If you’re asking yourself what this means and what it could lead to, you’re not alone. When this happens, the likelihood of you receiving a cash offer. This is a promise to purchase your property that doesn’t depend on the buyer having a mortgage or financing. Buyers might use this as an opportunity to stand out among multiple offers. However, as a seller, you might be wondering – what’s in it for me? Here’s what you should know about cash offers. 

First, let’s talk about what a cash offer is? Most offers on residential homes typically include three conditions: financing, an inspection, and a review of documents. When an all-cash offer is submitted, the buyer is telling the seller they have enough cash and investments to purchase the property. A cash offer doesn’t mean someone is going to the bank to pull out a bunch of cash. Cash buyers can be investors purchasing a home in a poor condition that wouldn’t otherwise qualify for a mortgage, or buyers who don’t need financing because they’re wealthy or have lots of equity after selling their home. 

Given the current state of the real estate market, it is not uncommon to see a house go up for sale and be sold within a week. This is largely because most homes that are listed are listed with an offer presentation date. Meaning, the home will go up for sale and you must submit your offer on the day of the offer presentations. If you’re a seller looking for a quick closing, an all-cash offer might be even more appealing. Before a buyer’s mortgage approval is finalized, lenders require an appraisal – banks need to ensure the property is worth the purchase price before securing the loan. 

In this market, even with a mortgage pre-approval letter, it can take 14 days to get financing approval, which locks up your house and can take away the momentum of the property being new on the market. However, with an all-cash offer, no appraisals are required because the buyer isn’t borrowing money from the bank. 

Typically, with cash offers, the promise to purchase will include a clause noting that the offer is conditional on providing proof of funds. We suggest our buyer clients ask their bank or investment advisor for a signed letter on their letterhead, stating how long they’ve been a client of the institution, they’re in good financial standing, and they have cash and/or investments in excess amount of X dollars before the purchase.

Most sellers will give a buyer several days to obtain this proof, but savvy buyers show up with an offer and proof-of-cash letter in hand more than the amount they’re initially offering. 

Take for example, somebody is buying a property for $1 million, we don’t know where they’re going to end up after negotiating, so it’s better if you provide a proof-of-funds letter exceeding what the actual offer amount is. Then, the seller knows you’re really good for the money. Proof-of-funds is a very powerful thing for a buyer and it’s a wonderful thing for a seller. 

However, just because buyers can show that they have a lot of money doesn’t necessarily mean that they’ll spend that much more on your property. 

If you’re a seller and wondering, should I take a different offer or refuse a cash offer? The answer is there is really no need to be suspicious when a buyer presents an all cash offer. This does not mean that the buyer is a criminal trying to launder money. All licensed agents and brokers are legally required to fill out a verification form from FINTRAC validating the source of the funds isn’t from proceeds of illegal activity. This is another reason to not sell a house on your own if you want to deal in cash offers. 

However, beware that buyers may come in with a lower offer, using the cash-only incentive as leverage. This is common but is becoming less common with how competitive the market has become. There is truly so many things to consider when selling your house, working with a reputable and qualified real estate agent is the first step to protect your assets and yourself. 

Most importantly is working with someone you can trust. We always suggest interviewing several agents to make sure that the one you choose to work with is one who you know will have your best interests first. If you’re curious about what our sales process and buying process is like, you can always contact us for a free consultation. We love real estate and helping potential buyers and sellers make sure they’re always well informed. 


Lion Crest Real Estate represents so much more than just buying or selling a house. we are a team of Realtors based in Hamilton, Ontario who are client driven with a passion for all things real estate. We don’t just talk the talk, we walk the walk.

We are dedicated to assisting you in one of the biggest financial decisions of your life. Buying or selling your home shouldn’t be a stressful experience and we are here to tell you that it doesn’t have to be. Real estate should be comfortable.

Let us know how we can assist you.