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Old 03-05-2008, 08:10 AM
 
Location: Gilbert - Val Vista Lakes
6,069 posts, read 14,729,338 times
Reputation: 3876

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Cash is King. When you offer all cash, the buyer knows there is no chance that the deal will fall out of escrow due to loan disapproval.

You can offer an immediate close, after you remove the inspection contingency. You can get an inspection done within a few days, and if there are no problems closing can be as fast as the funds can be wired to escrow.

You do not have to have an appraisal. It's up to you if you are comfortable that you know the value, so that is a contingency that may not be necessary.

Your offer can be based on a closing date of 15 days. If the seller counters with a 30 day close, then you can agree to the 30 days with a seller concession of xx dollars per day for the extra 15 days. Maybe you feels it's worth $1000 per day to you for delaying the close.

If you have the cash you have the power.
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Old 03-05-2008, 08:31 AM
 
3,555 posts, read 7,824,294 times
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I always buy for cash, and I expect, and get a big discount. Of course it helps if the house has been on the market a long time, if the market is slow and that I offer, 2 week closing, NO inspections/contingencies-not always but generally, and a healthy sized earnest money.

I realize that the seller is always going to get cash anyway, ONCE THE DEAL CLOSES, but I'm eliminating all of the "problems" that crop up on the way to closing.

BTW, I've purchased about 18 homes this way, my last three residences and the others were investment properties that I was flipping. I'd say that my "average" discount from asking price was on the order of 17%!

So, yes, cash is definitely worth more than "a point or so" to paraphrase a poster above.

golfgod
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Old 03-05-2008, 10:38 AM
 
Location: NW Las Vegas - Lone Mountain
15,756 posts, read 38,070,187 times
Reputation: 2661
We routinely deal with cash transactions. In the normal marketplace it has real but limited value.

In Sun City Summerlin in the last year there have been 222 sales of SFRs. Of these 74 were for cash. The average sale price was 329K, the median 286K and the average price per square foot was $187 per SF.

The 148 non Cash deals averaged $331K, median of 292K and a price per SF of $189.

So in a stable and well behaving market where no large numbers of shorts and foreclosures are causing strange impacts the value of cash is about 1.06%.

I know, I know...let us not confuse a good discussion with facts....
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Old 03-05-2008, 12:40 PM
 
Location: Montana
2,203 posts, read 9,292,212 times
Reputation: 1130
Quote:
Originally Posted by Cattknap View Post
I disagree - with as many homes as there are in foreclosure and with "quick sale" signs up, and with more and more people failing to qualify for new mortgages, it is the consensus of quite a few realtors that paying cash for a home can save you quite a bit. There are many empty new homes also - cash will get you the best deal on long empty new homes.

If someone were going to lose their home to foreclosure, they might lower their price in order to have a sure-thing buyer who brings cash to the table.
While I agree that your offer will get preference as a Cash offer and that you can deal more aggressively as a cash buyer, I must differ with you on the foreclosure thing.

Most people in foreclosure are upside down in their mortgage. Most bought with 100% financing when home prices were high. Most properties that are in the foreclosure process are vacant - the owners have simply walked away from them. The further into the foreclosure process a home is, the more back payments and legal fees would be incurred (by the owner if they have the funds to get the home back out of foreclosure in order to sell it and pay off the mortgage). It's highly unlikely that a seller in financial trouble would be able to do that, which would mean the buyer would have to catch up the back payments, taxes, legal fees, etc . . . or the bank must be willing to do a short sale, and then you - the Buyer - must be very patient while the bank decides if they'll take your offer (it really doesn't matter to them if it's cah or not - it's only their bottom line that counts) or whether they'll go ahead with foreclosure. Messy, messy. Wait, wait. Property sold "as is". Etc.

Now . . . if you want to make a cash offer to a motivated seller with lots of equity in his home (or a home without a mortgage on it), then I think a quick Cash sale is definitely VERY attractive.
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Old 03-05-2008, 12:50 PM
 
Location: Prospect, KY
5,284 posts, read 19,993,503 times
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You are right Gretchen....and I would not want to buy a house that was in foreclosure - we really hope to buy a house that is in move in condition.

I understand that in some parts of the country (parts of KY) being one, some builders will give an automatic 1 to 3% discount for cash sales.

There is a house we have looked at on the internet - in beautiful condition in a wonderful neighborhood - it is an estate sale - the house is empty and heirs are selling and the price seems very reasonable. I know estate sales can be a good/bad thing sometimes. We watched a house down the street from us go up for sale for about 40% more than what it should have - the heir was in Germany and felt the house was worth more than it was - it languished on the market during an upbeat real estate market until finally the price was lowered substantially.

The other thing, loans are being turned down more often now - our realtor has told us of several local home sales that didn't go through because the loans weren't approved - so a lower than anticipated cash offer might be very tempting to a seller that had a deal or two fall through. I'm in So. California - so even little fixer upper houses that are less than 1,000 square feet in a modest neighborhood are still going for well over $400,000.

I think there are circumstances where people would take a cash offer over a slightly higher offer (where a mortgage was involved)- when there are deadlines involved - new jobs in other areas, divorces, etc..

Let's face it, even professional real estate agents can't foresee every circumstance where a cash sale might be an advantage to a seller.

Any way - interesting subject and comments - thanks all.
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Old 03-05-2008, 01:14 PM
 
Location: Montana
2,203 posts, read 9,292,212 times
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Cattknap - keep your eyes on that home that's an estate sale. Oftentimes those can be very good deals. Of course, it's important to know the local market, so you know if they have it priced competitively now. I have seen some estate sale homes priced significantly below market value, just because the family wants a quick sale.

I think in most markets, whether a cash buyer or a qualified buyer who's getting financing, the key to getting a good price is to work with an agent that will keep you abreast of local real estate values and help you determine what the motivation level is of the seller. Right now, in most of parts of the country, motivated sellers are just happy to see any offer come in from a qualified buyer. However, you still have some sellers who are in denial that the market has dropped and they won't be able to get top dollar for their house.
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Old 03-05-2008, 02:24 PM
 
Location: Prospect, KY
5,284 posts, read 19,993,503 times
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Thank you Gretchen - everthing you have said makes sense.
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Old 03-05-2008, 08:31 PM
Status: "Made the Retirement Run in under 12 parsecs!!!" (set 4 hours ago)
 
Location: Cary, NC
43,048 posts, read 76,581,655 times
Reputation: 45368
Quote:
Originally Posted by Gretchen B View Post
While I agree that your offer will get preference as a Cash offer and that you can deal more aggressively as a cash buyer, I must differ with you on the foreclosure thing.

Most people in foreclosure are upside down in their mortgage. Most bought with 100% financing when home prices were high. Most properties that are in the foreclosure process are vacant - the owners have simply walked away from them. The further into the foreclosure process a home is, the more back payments and legal fees would be incurred (by the owner if they have the funds to get the home back out of foreclosure in order to sell it and pay off the mortgage). It's highly unlikely that a seller in financial trouble would be able to do that, which would mean the buyer would have to catch up the back payments, taxes, legal fees, etc . . . or the bank must be willing to do a short sale, and then you - the Buyer - must be very patient while the bank decides if they'll take your offer (it really doesn't matter to them if it's cah or not - it's only their bottom line that counts) or whether they'll go ahead with foreclosure. Messy, messy. Wait, wait. Property sold "as is". Etc.

Now . . . if you want to make a cash offer to a motivated seller with lots of equity in his home (or a home without a mortgage on it), then I think a quick Cash sale is definitely VERY attractive.
Agreed on foreclosures.
Or as I am fond of telling first-time buyers:
"Foreclosures are for rich people."
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Old 03-11-2008, 10:04 PM
 
Location: Palm Coast, Fl
2,249 posts, read 8,873,672 times
Reputation: 1009
Quote:
Let's face it, even professional real estate agents can't foresee every circumstance where a cash sale might be an advantage to a seller.
That pretty much sums it up. On the flip side, I've had some sellers tell me, I don't care if that's cash in their pocket, I'm getting cash at the table anyway...I'm not going to discount just because they 'have cash'. Sellers do what sellers do for what ever reason.
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Old 03-12-2008, 12:21 PM
 
Location: Knoxville
1,155 posts, read 3,375,644 times
Reputation: 372
cash offers, have no real contingencies, just make sure your buying for the market worth, as should you need to sell, then be sure a fair market appraisal is done, as you do not want to over spend. I would reccomend checking with your tax pract, to see what advantage you have, as payments could help in your tax sit, and maybe not.
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