14
Sep
2008
Real Estate Investment – Buying Home for Cash
Depending on the actual situation on the market, paying cash has definitely some benefits from a seller’s perspective. Of course, certain experts may claim that it is always cash in the end, and of course it is. However, getting to the “end” prevents some buyers who are using financing from getting there.
Why Sellers Always Prefer Cash Offers?
Frequently you will find sellers accepting an all-cash purchase offer over a higher priced offer with typical or FHA loan financing. The reason for this is because they are well aware the cash offer is more probable to close. It simply includes fewer stumbling blocks. And in some cases a bird in the hand is worth two in the bush, in a manner of speaking.
• No Appraisal Contingency – Appraisals are not cast in gold. The most popular technique is reliance on comparable sales, also referred to as the comparative method, which includes deciding on three properties and comparing those values to the property in question, adjusting upward or downward for updates / missing features.
• No Loan Funding Contingency – Although a buyer may be fully qualified to purchase a house at inception, a hundred problems may arise during the loan process. Apart from the home itself not qualifying, to certain conditions for loan approval that a buyer is not able meet, to loans that were once available drying up during escrow.
• Faster Closing – A buyer does not need 30 or 45 days to close if the buyer is not getting a loan. After the home inspection and other contingencies have been satisfied or released, closing can occur in as little as 7 days, as long as the buyer is eager to sign a lead paint waiver.
Why Buyers Like to Purchase Homes for Cash?
When REO lenders posses many foreclosures in their portfolios, typically the lender will discount the list price of the home hoping that the property will attract multiple offers. Buyers who pay cash for REO homes win multiple offer situations in the majority of cases. However, there are more benefits for buyers:
• No need for mortgage payment
• Feeling of security
• Equity available in case of a financial emergency
• Market fluctuations are not important
• No restrictions on title transfer due to underlying loan