Definition
Cash reserves are the liquid funds a buyer has left over after a purchase closes, usually measured by lenders in terms of how many months of mortgage payments they could cover. Strong reserves make a financed buyer a safer bet, since they can weather a job change or unexpected expense without missing payments. For a buyer planning to renovate, reserves also fund repairs and holding costs after closing. For a seller comparing offers, thin or nonexistent reserves on a financed buyer are a legitimate warning sign worth asking about.
Example
One buyer on Wanda's home had two months of cash reserves fully documented in his bank statements and cleared underwriting without a single hitch or delay. A second, competing buyer had almost no reserves left after his down payment and got flagged by the lender midway through the process, delaying closing while he scrambled to document a gift of funds from a relative. Wanda's agent advised her to weigh that difference carefully when choosing between the two offers, even though the second buyer's price was slightly higher on paper. Wanda asked both buyers pointed questions about their financial cushion before making a final decision, and the answers she got confirmed her agent's concerns. She ultimately went with the buyer who had solid reserves, valuing certainty over a marginally larger number that came with real risk attached. That sale closed exactly on schedule, while the other buyer was still sorting out his paperwork weeks later.