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Old 06-07-2013, 10:20 PM
 
291 posts, read 976,773 times
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I am gearing up to get back into the market, and will likely be paying all cash for the home purchase. I have gotten some varied feedback about the advantage that might give--one realtor acted as if it doesn't make much difference, while another said that it was a definite advantage and may even allow me to make a slightly lower offer or be able to expect more flexibility as to closing date or other details as a result (or would put me in a better position than a financing contingency offer for the same amount if it's a house I really loved). FWIW, I'd still need contingencies for inspection, appraisal, etc, but would be able to provide verification of funds (in a money market account) and close on whatever time line the seller wanted, as long as it was sufficient to complete the inspections/appraisal. I'd appreciate your thoughts.
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Old 06-07-2013, 10:50 PM
 
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I think it would be significant for someone who didn't want to worry about whether or not the buyer would get their loan. However, the seller would still need to hold their breathe a little while during the wait on your inspection and appraisal.
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Old 06-08-2013, 04:38 AM
 
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Depends on the seller. Personally as a seller I could care less if you paid in cash or not, I still walk away with the same amount of money.
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Old 06-08-2013, 05:44 AM
 
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Quote:
Originally Posted by 399083453 View Post
Depends on the seller. Personally as a seller I could care less if you paid in cash or not, I still walk away with the same amount of money.
Not necessarily. You might not walk away with anything if the loan fails which is not that uncommon in my market. When they do fail (for whatever reason) it is usually close to closing date. With a cash offer you have less to worry about and a greater certainty that it will close on the contract closing date. As a seller I'd give much more consideration to a cash offer.

Last edited by 1insider; 06-08-2013 at 05:45 AM.. Reason: additional wording
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Old 06-08-2013, 06:15 AM
 
Location: Baltimore
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Hard to say, credit has eased so closing a loan isn't as newsworthy as a couple years ago. Depends on your market.
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Old 06-08-2013, 06:32 AM
 
Location: Lakewood Ranch, FL
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It may be mincing words but it's not the cash that makes a deal more desireable. It's the absence of a financing contingency. So, yes, a cash offer is better than one with a financing contingency assuming that the other terms of the offer are equally interesting to the seller but I don't think it's enough to get you a discounted price of any great measure.
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Old 06-08-2013, 06:40 AM
 
4,399 posts, read 10,666,516 times
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Quote:
Originally Posted by jerseyjersey View Post
I am gearing up to get back into the market, and will likely be paying all cash for the home purchase. I have gotten some varied feedback about the advantage that might give--one realtor acted as if it doesn't make much difference, while another said that it was a definite advantage and may even allow me to make a slightly lower offer or be able to expect more flexibility as to closing date or other details as a result (or would put me in a better position than a financing contingency offer for the same amount if it's a house I really loved). FWIW, I'd still need contingencies for inspection, appraisal, etc, but would be able to provide verification of funds (in a money market account) and close on whatever time line the seller wanted, as long as it was sufficient to complete the inspections/appraisal. I'd appreciate your thoughts.
If you are still asking for a appraisal contingency than the advantage is negligible at best. That is really the only advantage of a cash offer no needed appraisal contingency.
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Old 06-08-2013, 07:07 AM
 
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Thanks for the feedback. I am not trying to make a lowball offer and justify it by saying it's a cash deal, I just thought it was interesting that the feedback I received (from 2 realtors who are well-regarded in the area) was so different.

It's my understanding that it's common practice to get an appraisal, even if you are paying cash. Is that not true everywhere?
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Old 06-08-2013, 07:12 AM
 
Location: Austin
7,244 posts, read 21,799,366 times
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Quote:
Originally Posted by jerseyjersey View Post
It's my understanding that it's common practice to get an appraisal, even if you are paying cash. Is that not true everywhere?
Appraisals are required by the lender. If there is no lender, an appraisal is not needed. The only reason to get an appraisal with a cash contract is if you overbid just to win because there were multiple offers and you went crazy and are now wondering if the value is there. If you feel the value is there with the cash offer you made, there is no need for an appraisal and a waste of $400-500.
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Old 06-08-2013, 07:16 AM
 
Location: Cary, NC
43,266 posts, read 77,043,330 times
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Quote:
Originally Posted by jerseyjersey View Post
Thanks for the feedback. I am not trying to make a lowball offer and justify it by saying it's a cash deal, I just thought it was interesting that the feedback I received (from 2 realtors who are well-regarded in the area) was so different.

It's my understanding that it's common practice to get an appraisal, even if you are paying cash. Is that not true everywhere?
I always suggest the appraisal for my buyers, particularly if they are not buying in a cookie cutter tract, where comping sales and arriving at fair market value can be pretty easy. An independent 3rd party opinion of value can be helpful.

The real answer is whether a specific seller in a specific situation will see a cash buyer's offer as better than the finance offer. In multiple offers, it is easy to assess the risks of either, and to make an informed decision.
If the cash offer is the only offer, it can be less, or more, difficult to play it off against "the other offer."
If the seller is under duress and a quick closing is helpful, a nimble cash buyer may be a real gift to the seller.

I sense that loan underwriting has tightened again lately. Putting the transaction's success or failure and timeline into the hands of an underwriter is the major negative of a finance offer.
The cash offer avoids that, and makes it easier to proceed, IMO, for the seller.

Secondly, if the seller has ongoing holding costs attached to the property, a cash buyer who can close quicker may give the seller the same net proceeds at a lower contract price, just for helping the seller avoid additional house payments and lower the tax, insurance, and association pro rata.

So, as in much of real estate, the proper answer is, "It depends...."
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