No-Financing Contingency Offer: A Way To Pay All Cash For A Property Without Having The Cash

If you want to pay all cash for a property but don't have all cash, one way is through a no-financing contingency offer. A no-financing contingency offer is a way to pay all cash for a property without actually having all cash.

From the buyer's point of view, making a no-financing contingency offer is like getting an all cash offer, but from the bank. The bank has already agreed to provide the loan after a very thorough underwriting process.

This post will go through my experience trying to bid on a hot property in the past. If I had used a no financing contingency offer, maybe I would have won.

Post pandemic, the housing market still remains stubbornly strong, despite so many rate hikes since 2022. So chances are, you may have to entire into a competitive bidding situation if you want to buy a dream home in this low inventory environment.

Paying all cash or making a no contingency offer could be your best bet in a competitive housing market.

The Power Of A No-Financing Contingency Offer

Years ago, I lost in a property bidding war despite bidding more than asking. If I had paid all cash, I might have won. At the time, I didn't understand the power of a no financing contingency offer.

The property was a single family house, 3/3, on a small lot, overlooking a park asking $1.299 million. I've known the listing agent for a while and she mentioned that $1.35 million would get it done.

However, I was thinking of offering $1.3 million instead. She had two other over-asking offers, but I couldn't muster up the courage to bid $1.35 million. So I offered $1.325 million and lost.

It wasn't a big loss because the property didn't tug at my heart. I figure, if I'm going to be spending more than a million bucks on a property, I better be excited, or else why bother. Yes, property prices are crazy out here in San Francisco, but this price point is actually relatively good value.

If only I was one of the ~34% of homebuyers who pay all cash for a property! I would have won the deal and made a lot more money. Oh well. The next best thing is a no-financing contingency offer.

Percentage of homebuyers who pay all cash for a home

No-Financing Contingency Is Most Attractive For A Seller

With a no-financing contingency offer, to the seller, it would have been the same as paying all cash for the house. If I was able to do a no financing contingency offer for $1.25 million, I think I could have bought the property.

Today, this property Is worth about $2.3 million according to Redfin and Zillow. Damn, what a missed opportunity.

Currently, I've been agonizing over paying down my existing rental property mortgages or leveraging up to buy more property. The jury is still out, but I'm willing to at least prospect around to see if there's anything I like before making a decision.

Besides, I figure this latest house hunting experience will provide good educational content for other folks looking to buy in a hot property market.

Sellers Fear A Financing Contingency

No Financing Contingency Offer: A Way To Pay All Cash For A Property Without Having The Cash

As a Financial Samurai, the number one thing you need to care about is what the opposing side cares about.

I've asked 10 listing agents what is their seller's #1 concern and they all said: financing contingencies and whether the buyer will be able to get a loan.

Don't listen to reports by the media on the return of loose credit standards. Credit is still tight, especially with higher rates.

For example, freelance income doesn't count. Lenders only counting 75% of my rental income. Lenders assigning only a 1% return on my CDs for asset based underwriting even though they are returning 3-4.2%, etc.

A typical, strong property offer includes a 14-day financing contingency, and a 30 day close. The 14-day financing contingency is to protect the buyer from losing their 3% downpayment of purchase price just in case he loses his job or can't get a loan.

A Financing Contingency Lets Buyers Escape

The reality is, the financing contingency is often used as an escape hatch for any excuse, not just a financing one. For example, the buyer may have found another property during this time period, or is simply experiencing buyer's remorse. The second escape hatch is the home inspection contingency.

When you hear about properties receiving “all cash offers,” not all the buyers really have all cash. Instead, some of the buyers go the no financing contingency route to equate their offer as all cash. If you're confused, think about the situation from the seller's perspective.

If the buyer does have $1 million bucks cash to pay for your $1 million house, he'll go through the process of putting down the 3% deposit, go through an inspection, increase the deposit further by a certain amount in escrow, and then finally pay for the entire property when legal documents and title are signed and exchanged.

During this process, the buyer can pull out at any time. However, if the buyer pulls out after releasing contingencies, he will forfeit the 3% earnest money deposit. The deposits can be fought over if the buyer wants to really get contentious.

No-Financing Contingency Offer Is More Competitive

If another buyer has a no-financing contingency offer, that means the bank has already approved the loan in full and the seller doesn't have to fear the buyer not getting a loan because the bank's underwriter already deems the buyer and such a property worthy. A no financing contingency offer is clearly stated by the bank via a letter.

Whether the buyer pays all cash or the bank pays all cash is the same to the seller. Think of the no financing contingency offer as your bank willing to buy the property itself. The buyer and the bank have a financing arrangement after close that is none of anybody else's business.

In general, I recommend all buyers submit an offer with contingencies to protect themselves. Buying a home is likely the most expensive purchase of your life. You want to be as thorough as possible with your home inspection.

If you need more time to close once you get into contract, here are strategies for delaying the close of escrow without losing the home. The longer you can be in escrow, the more money you'll make and save. ONce you close escrow, you have to pay the mortgage, property taxes, insurance, maintenance costs, and more.

How To Pay All Cash For A Property Without Having All The Cash

If you don't have all cash in the form of savings and/or liquid securities, you are still eligible to pay all cash in the seller's eyes. The bank just needs to do its due diligence on you before the offer, which is why it helps if you've been a long-term client with the mortgage institution.

Due diligence includes the last two years of W2s, last two pay stubs, all brokerage accounts, all CDs and savings accounts, understanding all liabilities and assets, your credit score and credit history, the likelihood that you will continue to remain employed or receive income after financing, and financial track record with the institution.

Banks want to continuously make money through an interest rate spread. Offering a no financing contingency option helps them win business.

Get a no financing contingency by following these steps:

1) Ask your lender.

Ask your mortgage lender whether they do no financing contingency offers. Larger banks with wealth management departments should be able to help more easily.

2) Ask yourself whether removing your financing contingency is right.

If they say “yes,” ask yourself whether you really don't want an escape clause because you are 200% certain you want the home. You do have the inspection contingency to fall back on as well, but this is another thing you might wave if the seller's recently had an inspection done with a report from a reputable inspector. You will most likely lose the 3% deposit if you decide to back out from your offer after the initial signing.

3) Ask about the right documents needed.

Ask your mortgage lender what extra documents are required from the seller in order for them to do due diligence before the offer date. Sending the title is definitely one of the documents to ascertain current legal ownership of the property. Sending all other disclosure documents including the pest inspection, general inspection, agent's inspection, and anything else is a good idea.

The bank's main concern is whether you are good for the loan. The second concern is whether the property is worth its price.

4) Your finances must be in tip top shape to proceed.

Make sure all your finances are in order like you would for any mortgage loan. The mortgage application process is as stringent as ever. If you do not have any W2 income, you can basically kiss your ability to get a mortgage goodbye.

The only saving grace is if you have a lot of assets. Banks will then use an asset-based income stream. For example, for every provable $1 million in liquid assets a bank might grant you $30,000 in income in their underwriting calculation. It depends from bank to bank.

5) Hold onto your job or make sure your cash flow is secure.

Make sure you'll have a job during the closing process, or a solid income stream for as far out as possible after closing. Nothing is worse than getting into huge debt and then finding out your main source of income disappears. Build multiple income streams!

No Contingency Financing Strategy

I plan to use the no financing contingency strategy to get better deals. In real estate, money is made on the purchase not on the sale. I absolutely love that I could pay in cash by liquidating stock and bond holdings. Paying 100% in cash is a last resort. The reason why is because I can get a low mortgage rate.

The other good strategy is just not even write no financing contingency in the offer. Instead, write “all cash,” and then get financing with the bank if you know they have agreed. I do not think tying up most of your liquidity in property is a good idea. Stay diversified!

From the bank's point of view, I'm a riskier borrower as an entrepreneur compared to a W2 earner. But from my point of view as an entrepreneur, I'm less risky because I'm living in risk already and thriving. I can't get fired unless I fire myself.

Besides, my total compensation is structured so that I have a strong safety net because I have passive income, contracting income, deferred compensation in the form of W2 income, and entrepreneurial income. We all know that there's no job security anymore anyway.

Real Estate Price Appreciation Is Not Guaranteed

If you're looking to buy a property in a hot market, don't forget about the Global Financial Crisis. Buying in a non-prime location is not the best choice during a downturn.

Even if you're buying in a prime location, then still be prepared to lose 25% in a downturn. Getting in a bidding war based on emotional desire is a losing proposition. You must have a base line number where you are willing to walk away.

Over the long run, I think most property owners will be fine. It's the short run that can put homeowners at risk.

I'm looking to buy a new home to live in and rent out my existing home. This way, I can unlock some cash flow and generate even more passive income. Rental properties are the most attractive asset class post pandemic.

Everybody is spending more time at home, therefore, the intrinsic value of real estate has permanently increased.

Real Estate Recommendations

If you don't have the downpayment to buy a property, don't want to deal with the hassle of managing real estate, or don't want to tie up your liquidity in physical real estate, take a look at Fundrise, one of the largest real estate crowdsourcing companies today.

Real estate is a key component of a diversified portfolio. Fundrise enables you to be more flexible in your real estate investments. You can invest beyond just where you live for the best returns possible. With Fundrise's funds, you can easily gain commercial real estate exposure across the country. Heartland real estate is my favorite.


Another excellent platform, but for accredited investors only, is CrowdStreet. CrowdStreet focuses primarily on individual real estate opportunities in 18-hour cities. 18-hour cities trade at lower valuations, have higher cap rates, and higher growth rates. I've met a bunch of the CrowdStreet folks in Palo Alto, and I was impressed with their offering.

I've personally invested $953,000 in real estate crowdfunding to diversify and earn income passively. So far, I've received over $624,000 in real estate distributions and counting.

Passive real estate investing dashboard

Shop For A Lower Mortgage Rate

Check out the latest mortgage rates online. You'll get real quotes from pre-vetted, qualified lenders in under three minutes. The more free quotes you can get, the better. This way, you know you're getting the lowest rate possible with the lowest fees.

Being able to offer a no financing contingency offer is one of the best ways to beat out the competition. Good luck! Just don't go overboard when bidding. Emotions can get the best of people.

No Financing Contingency Offer is a Financial Samurai original post.

About The Author

45 thoughts on “No-Financing Contingency Offer: A Way To Pay All Cash For A Property Without Having The Cash”

  1. Buddhist Slacker

    This was super helpful thank you I did not know about this option. Previously I paid with actual cash.

  2. Brian Compton

    I found a 2000 sqft fixer home on 2 acres for 50k. I am very capable of doing whatever work it may need but the seller is cash only. And, I have squat for assets. Is there some way to get a lender to lend me cash for the land itself?

    I know I am the typical audience for this blog but thanks for all the info. A guy can dream.

  3. Great Article. Thanks for the info. Does anyone know where I can find a blank “2010 FR ASIS-1, [6/10]” to fill out?

  4. Would you mind listing (or PMing me) any banks that will do the financing as described? I’m going through this right now and plan to make an offer by the end of the week. Also, any idea how long it took for the bank to pre-finance (?) the loan?

    I also live in San Francisco and am having the same exact problem. Can’t seem to compete with these cash offers. In recent months I’ve bid higher (and lost) to other cash offers. Today I actually spoke to a couple mortgage lenders and they didn’t mention anything about the strategy described. The only strategy we discussed was removing the financial contingency and guaranteeing close of contract within a shorter duration (from 30 to 17 days).

  5. SF real estate is just cra-cra to a poor Midwesterner like me. I can’t get over the idea of bidding above listing. Do you also buy stocks above market price? Pay a little extra for your groceries? Decide the gas station isn’t getting enough, and up the price for them? Pay above sticker for your car?

    I am not getting into the relative prices, but the process boggles my mind. Anyone from either coast buying property in a flyover state looks like a fool, because the process is entirely different. It seems like lots of people could use a negotiation seminar.

      1. I can see that point, I guess–that is a common auction strategy, where you expect to have enough potential buyers exposed to the property that you will spark a bidding war.

        I can clearly recall a discussion in Indianapolis between a new immigrant from California and a friend of mine who does real estate development. She leaned over, seeking local advice, and asked “how much over listing should I start my bid?” He looked at her as if she were speaking a foreign language. (and this guy is usually on the buy side–broke through his poker face)

        It could just be a case of culture shock, but I imagine that the markets must be quite volatile where the two approaches intersect: Idaho, Utah, Nevada? Pennsylvania? It’s hard two imagine how those two approaches would interact with each other, on either side of a transaction: shock (positive or negative) or insult.

  6. Very informative article. I guess these high prices are the reason why 2/3 of SF people rent and many still live with roommates even in their 30s. However, enough people like you have “made it” financially in order for the common middle class working folks to keep chasing their dreams in this expensive city. Good for you for taking the right steps in your 20s and early 30s. Good luck on your house search.

  7. At the first of this year I listed a rental for sale. It’s a manufactured home on small acreage. (Double-wide mobile home) On January 7, I got an offer from an FHA buyer with a mortgage pre-approval letter. The first week of February, their mortgage company “realized” the home was manufactured and they would not finance it. I have an engineers report showing the house has a permanent foundation an meets FHA criteria.

    The buyer’s agent quickly found another mortgage broker who said they would do the loan. Closing set for the first week in March. When closing came, the buyer asked for an extension of a week because the mortgage company was backed up and the loan was still waiting for underwriting. Then they asked for twomore weeks. I called the mortgage company and asked what the deal was. They said, yes they were behind and it was about to go through underwriting. The closing date passed. I called the agent. “Any day now,” he said.

    A few days later the agent texted “call me.” I did. He said they were terminating the contract. They did not qualify. He said their credit had dropped in the nearly 3 months we were under contract. They forfeited their earnest money.

    So I put the house back on the market. Within a week I got another offer. Lower, but all cash. Sounded great after the first “buyer.” A week later this cash buyer terminated within their option period. No reason given by the agent. By the way, the home shows well and has no problems.

    Back on the market again. The middle of last week I got another all cash offer. No inspection, 7 day option period. We are supposed to close the end of this week. We’ll see.

    1. Jon,

      That sounds like a nightmare. Did you not get to keep the earnest money deposit from the second offer too?

      As a seller, what else would you like to see the buyer do to bring you comfort during the process?

  8. I’m a TX resident, but am out in the bay area all the time for work. I’m writing this in Belmont right now. I’m also a budding RE investor, but am completely amazed at prices out here. It’s a complete speculation game as far as I’m concerned. A quick check for SF put the median rent on a 3 bedroom unit at $3800. Let’s assume this is a top 10% that it puts at $4500.

    Even if every cent of that $4500 was cashflow (I’d estimate half without knowing more), we’re talking $54,000 / year and thus a cap rate of 54000 / 1300000 = 4%. Again, reality is probably half that.

    For the wealthy, OK, big deal if you’re buying this in cash. But, for any random Joe reading this and thinking a mortgage might be a good idea here, please understand what a huge risk this would be. All the profit is made assuming a “greater fool”. This is speculation, pure and simple.



  9. Living in Silicon Valley rather than SF gives me a slightly skewed perspective on city life.

    I don’t know the property, looks like the Sunset district offhand, but $1.2M for a single family house in SF with an ocean view is market. It’s crazy from an outsider perspective, but if you want to own your home in the city, you’re talking astronomical costs.

    I’m happy with my condo in the valley for now, especially given the constant market whipsaws. From my perspective, I’d rather lose half of $400K for a condo than half of $1M for a standalone house.

    1. The ocean view SFH will probably go closer to $1.5 million.

      Haven’t seen a $400,000 condo this year in SF. If much rather make 50% on a $1.5 million place than 50% from a $400,000 place.

  10. Sorry to hear that this didn’t work out for you. I can’t imagine spending that kind of money – especially on a property that you don’t love. I don’t have any plans to get into real estate again any time soon, but when I do, I’ll have a better idea of what to expect.
    Hopefully you have better luck in the future.

  11. I always hate a buyer’s market where you have to bid on property for more than the listing price. $1.2 mm is downsizing? I think you should look for a fixer. The best offers satisfy what the seller wants which may mean no contingency or something else. Your broker needs to find that out.

  12. Done by Forty

    Good stuff, Sam. If you had to put a value on a no-financing contingency or a cash offer, what do you think a seller would discount the price by for such an offer? 5%? 10%?

    1. Good question. If I was a seller, I’d be willing to accept up to a $25,000 discount or 3% discount, whichever is lower if someone offered a CASH offer vs. a contingency offer. The worst is to have a buyer flake, and the listing becomes stalefish. Lots of time wasted and the value of the property will be hit b/c other buyers will woner what’s wrong.

  13. The Wallet Doctor

    Very interesting. I didn’t realize that there were two escape hatches for the buyers to bail. It must be challenging for those selling the homes to stay confident that everything will go through. How do you get that loan guaranteed prior to starting the process? It sounds like that would give everyone more confidence, at least at that part of the game.

  14. Dan @ The Mad Real World

    Good article. I did not know banks offered this. I agree not to tie up too much cash in a property. With the inspection clause you should be able to get out without losing your deposit. I see a lot of people pay cash and then refinance later but your method is safer if they qualify since you don’t have to initially put up the cash.

    Commercial financing is also an option if you have a hard time qualifying for residential mortgages.

    A free massage per month??

  15. I am a commercial real estate attorney on the east coast. In my world– everyone makes “all cash ” offers. They play the game basically in the way you describe.

    In commercial real estate there is always a 30+ day “due diligence period”– which is the equivalent of a free inspection timeframe. There is usually an express termination right if the “inspection” discloses anything that the Buyer doesn’t like. And the deposit is not at risk until AFTER the inspection period expires. Compare this to the inspection contingency FS mentions.

    In a residential contract you can do pretty much the same thing as long as you have some time frame for a “free look” and can terminate for any reason at all for some period of time.
    The reality is that you should never buy any real estate without having an opportunity to have some pro’s look at the roof, structure and mechanical systems. There could be serious hidden or undisclosed damage or deferred maintenance issues.

    With that escape hatch– commercial buyers simply get their financing during the inspection period. If they cannot obtain it that fast — (i) they kickout or ask for an extension or (ii) they actually do pay cash and quickly put a loan on the property after the fact.

    1. Thanks for sharing Jonathan.

      If the seller used a well-known and reputable inspector recently, can one just trust and call up that inspector instead of getting a second opinion?

      The inspector can’t be shady, for fear of tremendous reputation risk. Yelp, for example, could clearly ruin the inspector’s rep.

      1. You could use the same inspector BUT I would not simply rely on the report contracted for by the seller—I would definitely have that inspector certify that they agree you can rely on sellers report or have them reissue the report to you as a client. That way you have a contractual relationship with the inspection company, they are bound to YOU as a client, and you can sue them if it turns out they were negligent in their findings or knowingly misrepresented he facts.

        If their reputation is ruined per Yelp— that may make you smile but it does not give you recourse against them.

        You probably will have to pay them their typical inspection fee to get them to do that– but its worth it.

        1. Good points and good recommendation. What’s $500 bucks anyway? Like insurance, which is better value for more expensive properties.

          I’m going back to this one property for the 4th time today with handyman to see what else I might have missed.

  16. You have slightly different processes than we do in Colorado. Usually the buyer gets a 30 day financing contingency here, which really allows them to back out until the very end and not lose their deposit. We normally see 1% earnest money deposit, not 3%, but that could be the lower price range too.

    I use financing all the time to buy properties, but almost always present them as cash. I have no financing contingencies, appraisals and many times no inspection contingency either.

    one thing people should be aware of is the appraisal. If they are getting financing and the bank requires an appraisal, they may have to bring a lot more to closing if that appraisal comes in low and they had no financing contingencies.

    1. Good to know. Also, the appraisal should buy some time too no? The appraiser could take time to set an appointment as an example

      I think the market is much stronger here in SF than CO.

      1. The appraiser can buy time if it is part of the contract. Like you mentioned financing is scary to sellers and if you have an appraisal condition in the contract it shows there is a loan and something to worry about.

        Our market is very strong here, but not like Cali. We had 1500 homes for sale in our town last year at this time and now we have 200 for sale. 100,000 people

  17. There is no doubt San Fran area is awesome, I think a lot of the acceptance of the costs out there is by people that are from there or have come to grips with getting half for your money that you do in other great places. From an outsider it does seem like a house of cards…but I am pretty sure it is not…well of course as long as the fault line doesn’t open up and swallow the city again. Supply in demand is a great thing!

    I am sort of in a quandary right now about what I think about future real estate investments. Yes it is definitely going the right direction long term, but sometimes you have to take a little off the table. Seems to me it might be a good time to be a contrarian and move the opposite direction of the heard that has driven prices up so dramatically in the past couple years…but what the hell do I know, lol!

    1. Indeed. Wherever you live, if Godzilla doesn’t stomp your city, I think you guys will probably be safe too.

      It’s important to have a walk away price. I don’t have the sense of urgency to buy as 11 years ago now that I’m long property. Hence, I don’t have that anxiety or pressure anymore. But, I have all my ducks in a row, including a personalized letter, picture, and proof of cash purchase ability. Might as well give yourself the best options possible.

      1. Well I you are going to set up a home base SF about as good as it can get. If somebody put a gun to my head and said pick one spot to live the rest of your life, I’d probably go with a home on Lake Tahoe, or the Monterrey Peninsula.

        As far as buying property goes, I think you are doing the prudent and wise thing in your case. The only question I have is I had thought you were considering setting up shop in Hawaii since that is sort of home? A 25% dip could put a wrinkle in that plan with significant exposure…especially if the loans have recourse. BTW, there is a new Godzilla movie coming out…and SF is not that far from Japan, just saying you may want to see that first before pulling the trigger.

        1. Hawaii is definitely in the cards.

          One reason why I love Hawaii is because our house has a view of downtown and the water. That said, it’s hard for any individual to make more than around $60,000 a year in Hawaii if I were to go back to work or be a consultant.

          Through my consulting experience so far, higher salaries in SF are ubiquitous. It’s a nice safety buffer if I wanted to continue consulting.

          I found this amazing house in SF that has panoramic ocean views. If I can get that, I think I’ll stay in SF.

          1. Its funny that you mention the views of the water in both of your scenarios…you are like me, once you have it, you will not want to ever give it up! The whole job market thing really does help skew the equation towards SF…that is the nice thing about where I’m at in my line of work as well, sort of like shooting fish in a barrel.

  18. We will be going to San Francisco soon and I can’t wait to see what all the fuss is about. To be offering over the asking at $1.3 million on a small house and being outbuid sounds nuts from where we sit. We’re visiting my wife’s brother and his wife before they move back to the east coast and they can’t wait to get outta there even though they like the SF area. Then again – they’re not working for Google or another hot company so it’s hard to afford the cost of living.

    1. I think you’ll be surprised.

      1) Only really attractive people live here who are really humble and friendly.

      2) Nobody ever cuts you off in traffic.

      3) Blue skies with parrots every day.

      4) Six figure jobs are a dime a dozen.

      5) Dolphins splashing in the water with the sea lions.

      6) Diversity and acceptance of everyone.

      7) Free full-body massages for every tax paying citizen once a month!

      Where are you coming in from again? I can help you prepare.

    2. 6) Diversity and acceptance of everyone.

      Unless your political view don’t toe the “progressive” line, that is.

      Back to the strategy, don’t get it, because where does the appraisal come in? Before the offer? I know of a situation where the seller refused to let an appraiser (appraisal required by the lender) on the property because the offer was “all cash”.

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