Sellers often prefer cash because transactions can close quickly without making a deal contingent on financing. This is particularly important in bidding wars: If the purchase price is above the list price and appraised value, it may be tricky to get a loan, said Kas Divband, a Washington, D.C., agent with Redfin. Mr. Divband said he has worked on six deals where the buyer was relying on a parent’s mortgage to make an all-cash offer. The strategy is also evidence of how difficult it is for millennials getting into the housing market for starter homes, where competition is the fiercest. Even those with high-paying jobs and hefty down payments are losing out, particularly in cities with strong job markets for young people, such as Washington, Boston and Seattle, said Nela Richardson, Redfin’s chief economist. Redfin agent Cody Coffman recently worked with a 20-something Olympic athlete who paid $2.8 million for his first home, a newly built five-bedroom house in Los Angeles’s Venice neighborhood that was listed for $2.7 million. His parents took out a home-equity line of credit, or HELOC, to give him the full purchase price, allowing him to beat out four other offers. “Educating him on how to talk to his parents was probably the most difficult part,” Mr. Coffman said, since it wasn’t every day their son asked for $2 million. The athlete worked with a loan officer who vetted him before the purchase and also handled his parent’s line of credit. To be sure, this move will not work for everyone. Parents must have enough equity in their homes to make a refinance worth it and the same goes for the child’s new home. Both parties must be willing to take on the added hassle and cost of two loans. And mixing family and money is often fraught, especially when large sums—and people’s homes—are involved.Here are a few more things to keep in mind: