What does a "cash offer" really mean?

[Account Closed]

I feel silly even having to ask this question, but how exactly does a "cash offer" transaction occur on a home/lot?  Deals are moving quick in my area, often with several cash offers made in the first day a deal is available.  

Are most of these folks just making offers with no financing contingency, then tapping lines of credit or using other instruments to close these deals, or are they literally wiring cash from their checking accounts at closing? One builder I spoke to said he always offers "cash", but usually that just means his bank will give him a proof of funds letter and then he figures out how to close it after that.  

In the large multifamily world in which I work, most everything is bought with financing and even when someone says they are offering cash, it is still financed somehow.  We never include a financing contingency, but the assumption is always that the deal will be financed.

I'm sure there is a simple explanation for this that I'm missing.  

[Tom Reynolds]

Often a property will have a condition or conditions that will not comply with the conventional mortgage guidelines. Usually to qualify for a conventional mortgage for a property with habitable space (a residence, multi-family or some commercial use properties) it is required to be "livable/habitable". This means that if any of the components of the structure, plumbing, electrical or mechanical systems are deficient and will not pass the lenders inspection, it will not qualify for a loan. Usually the seller is aware of the deficiencies, is unwilling to make these changes prior to the sale and will restrict a sale to "cash only". In many cases this can be a relatively simply fix item but if the property has been determined "unlivable" at the time of the inspection and will be in that condition at the time of sale, the loan application will not go through.