Cash is King
Cash buyers are a great asset in the real estate industry. It means for the selling side:
- Shorter time to close – typically 14 days maximum to close a deal.
- No mortgage lending company to deal with (sorry to my loan officer colleagues), which also equals no appraisal (in theory).
- Sometimes the buyer is willing to buy the property “as is” and forgo asking the seller to fix things.
All in all good things for the seller. If a reasonable deal like that landed in my lap, I would be clapping my hands with joy and breaking out the champagne with my selling client.
Now, if you are a cash buyer how do you protect yourself in a deal?
- Pay for a home inspection. It is the most important part of buying a home with or without a mortgage. A good home inspector will alert you to any major issues with the home, which will allow you to propose a remedy, to reduce the price, or to back out of the deal.
- Pay for an appraisal. As a cash buyer, you have a right to know if a third party agrees with your purchase price. It’s an option and something I would encourage a cash buying client to do since paying cash (a large amount of cash) is a greater investment at this point, of your own money. Banks do it to protect them from “bad investments”. Why shouldn’t you?
- If someone asks you for proof of funds, don’t be shy about giving it to them, but protect your account by removing any and all account information.
If you have noticed, I have yet talked about price. Price is subjective to the condition, area, number of offers,and most of all what a buyer is willing to pay for a property. A seller may receive a “tight” offer, but the price is so low that it is inconceivable to the seller to sell at that price. The subjectivity of price and the condition of the market goes hand in hand. In a hot market, buyers may be paying over list consistently in order to get the property they want. If that is happening and a cash deal is offered for significantly less than all other offers, it may not be advantageous to pursue the deal unless that buyer is willing to come up in price. It all depends on the seller, their motives, and ultimately the price they are willing to accept for their property.
Yes, that is a factor. The seller must be willing to sell the property at a certain price.
Cash is King only if it is offered correctly.