Buying a Home with Cash: What to Know

Twenty years ago, my husband and I started flipping houses in Green Bay, Wisconsin. That experience inspired me to pursue a career as a real estate broker. Over the years, I have become an expert at flipping homes and helping investors find homes. House flippers, investors, and diligent savers often have the cash on hand to buy a house with cash. Instead of financing their purchase with a home loan, they pay for the home with a cashier’s check or wire transfer. Buyers who make all-cash offers need to take different steps to purchase a house than buyers with home loans. That’s why it’s critical to work with a real estate broker who has experience with cash offers for investors, savers, and house flippers.
According to the National Association of REALTORS® 2023 Profile of Home Buyers and Sellers, 80% of recent home buyers secured a home loan to purchase real estate. For the 20% who can swing it financially, buying a house with a cash offer has its advantages. We’ll take a look at both the advantages and disadvantages of a cash home buyer.

Advantages of Buying a Home with Cash

Saving Money on Mortgage Fees & Interest

Cash home buyers save thousands of dollars on interest payments and other mortgage fees. For example, let’s consider a home buyer who borrows $240,000 at 7% interest with a 30-year fixed rate mortgage. In addition to repaying the $240,000, the buyer also owes $334,820 in interest (calculator.net). By paying cash, home buyers skip the mortgage process and loan fees, including mortgage insurance and interest payments. Additionally, closing costs are reduced with cash purchases. Homebuyers don’t need to pay a loan application fee or other lender fees.

Appealing to Home Sellers

In today’s competitive real estate market, cash home buyers have an advantage over those who finance their home purchases. Sellers often prefer a cash offer because they don’t need to worry about the buyer’s financing. Some home sales fall through at the last minute if a mortgage lender doesn’t approve financing.

Faster Real Estate Process

Plus, cash transactions are faster to process because there’s much less paperwork and fewer administrative tasks. Home buyers and sellers don’t need to wait for lenders to approve, underwrite, and process a home loan. The closing process is faster, which is a huge advantage to buyers and sellers who want a house sale to move quickly, for whatever reason.

Satisfaction of Owning a Home

Another advantage for cash home buyers is the peace of mind knowing they own a home debt-free. The home is theirs, and they don’t need to worry about losing their house if they can’t make house payments.

Disadvantages of Buying a Home with Cash

A Lack of Liquidity in an Emergency

Paying for a house with cash has several disadvantages. First, a home purchase is a major investment, turning a large amount of money into an asset that lacks liquidity. Essentially, an all-cash deal shouldn’t threaten a home buyer’s financial stability. Cash home buyers need to have emergency savings on hand that they can access quickly and easily, if necessary. It’s much faster to take money from a savings account than putting your house up for sale and using the money from a home sale. Plus, homeowners in a hurry to sell may be forced to sell at a loss.

Inability to Invest in Other Assets

Carrying some real estate debt often leaves homeowners with the resources to invest in other assets. These assets may increase their wealth in the future. Tying up a lot of cash in one property may not be the smartest financial decision. Home buyers need to be aware of homeowner expenses they’ll encounter. They will need enough money to pay their homeowners insurance, property taxes, and possibly, homeowners association fees.

Missing Out on Mortgage Tax Breaks

Another disadvantage of a cash offer is the tax implications. Homeowners can reduce their taxable income by deducting the interest paid on the first $750,000 of their mortgage. Buyers who pay cash for a house won’t have this tax reduction option.

Consult with a Financial Advisor

Buying a home with cash can be a good option for house flippers, investors, and select buyers in the Green Bay real estate market. But first, they should consult with a financial advisor to review their financial portfolio and evaluate the advantages and disadvantages of a cash offer.

Work With an Experienced Real Estate Agent

Cash home buyers also should work with a real estate company, like Express Realty, that is experienced in all-cash home purchases. Terri Balistriere, of Express Realty, has 15 years of experience in the Green Bay real estate market. She’s also an experienced house flipper. There are many strategies in which investors can make money off of investment properties by taking out a loan or paying all cash. Terri did so on three properties in 2024! She helps investors find the right property and the right balance for financing their investment property.

Save With Low Commission of 4%

Terri is an expert negotiator with a solid understanding of what a property is worth. Best of all, Express Realty’s low commission model enables clients to keep more of their hard-earned money in their pocket! Why pay 6% to sell your home with another real estate agent when you can pay Express Realty a lower commission of 4%? (Express Realty: Consistently Low Commissions Amid Real Estate Changes) You might save over $10,000 and enjoy an exceptional home-buying experience. Contact Express Realty for a complimentary consultation.