Home Buying in 95138>Question Details

pam, Home Seller in 95148

Can I get good deal if I buy bank-owned home by cash?

Asked by pam, 95148 Tue May 1, 2012

Help the community by answering this question:


The reality is that all offers are cash to the seller the day escrow closes. Whether the cash comes from your bank account or from a mortgage lender, the seller gets the same amount. As a listing agent, I advise sellers not to accept a discounted cash offer unless:
1) It's the ONLY offer received, or...
2) If the other offer(s) are from weakly-qualified buyers, or...
3) The seller would somehow benefit from a much shorter escrow period that a cash buyer might offer
Many REO decision makers working for banks use this same thought process.
The real strengths of a cash offer are:
1) No loan contingency
2) No appraisal contingency, if the buyer so chooses
3) Property can have flaws acceptable to a buyer that a lender might not accept
4) Ability to close at the conclusion of inspections
2 votes Thank Flag Link Tue May 1, 2012
I'm sorry to inform you but below market "deals" are pretty much gone. Here is why.

Our inventory in Santa Clara County for Single Family homes (that is from Gilroy to Palo Alto, all price points) approximately 1,260. Break that down into zip code and price point and you should be able to see that it is very low. To give perspective in a more balanced market we are closer to 3,000. To put this in even larger perspective when compared to Texas with about the same population, Texas bass 22,000! So this means that when a home is priced for the market we are seeing multiple offers and that equates to as-is, and over asking.

What cash will do of you is remove the finance contingency and can help to raise you to the top of consideration, that being all things equal in price, terms, etc.

I'd like to invite you to have a face to face conversation with me so that I can give you more information to help you. Unless you are working with a Buyer agent already, then they should have had this and more conversations with you already.

Have an amazing day!
Web Reference: http://www.terrivellios.com
2 votes Thank Flag Link Tue May 1, 2012
If it is a fixer upper that buyers with loans would having trouble financing, yes you can get a good deal. If it's not a fixer upper and FHA buyers could easily buy, you probably will not get that great of a discount.
1 vote Thank Flag Link Fri May 4, 2012
I don't think that banks care much for cash vs. financing. You may have better luck making a cash deal on an open market.
1 vote Thank Flag Link Thu May 3, 2012
Hello Erika,

This depends on where you are buying - if the values in the area are on the rise or not.

The rising values area will have many bidding wars with mainly investors and some principal residents buyers - fighting for foreclosures. If the area you are interested in is not like that yet, sure, you'll have some advantage as your offer will be stronger than others (no mortgage uncertainty).
However, if the difference between the financed offer and the cash offer is not significant (less than 15K - roughly), the bank might prefer a regular homeowner to the investor...

This is especially true in Homepath and Homesteps programs - where regular buyers have advantage over investors.

Irina Karan
CDPE - Certified Distressed Property Expert
Beachfront Realty, Inc.
1 vote Thank Flag Link Thu May 3, 2012
All things being equal, cash will win out every time.

BUT…all things are most often not equal.

For instance, I suspect that you think you should be able to buy for less because you will pay in cash. That is a faulty assumption. Sellers want the best offer. The best is often the highest whether cash of not. As has already been said, the seller gets cash when the sale is complete even if the buyer has to borrow the cash to give to the seller.

Cash is powerful if there is enough cash to satisfy the seller.
1 vote Thank Flag Link Tue May 1, 2012
It depends where you are buying and what you are buying. I hate the term cash is king because in low inventory markets that usually is not the case.

Most the time a foreclosure property will take a higher offer than an all cash offer is the property is in decent condition. I did have a buyer recently get a property that was a foreclosure $40K under the highest bid because the property needed work and the bank didn't want to deal with it.

Banks will always say "as is" but there is no such thing "as is" in California. Just never remove your inspection contingency. Read my blog post on buying "as is"


Good Luck.
1 vote Thank Flag Link Tue May 1, 2012
Cash offers mean less to a bank than a private seller. Overall price means more, even if a loan is involved / which could slow things up. The bank look s at a spread sheet and goes from there. However, if you have a strong offer and all cash, and the ability to close quickly if may be helpful. Side note: if you are an all cash buyer, you will need to have liquid funds ready to be deposited into the escrow account. Not the possibility of getting the funds or selling stocks, or getting it as a gift. Those things mean nothing when purchasing a home.

Jim Mauldwin
Intero Real Estate
DRE # 01125380 since 1991
Web Reference: http://jimmauldwin.com
1 vote Thank Flag Link Tue May 1, 2012
Yes, cash is King in this market. I still recommend a short contingency for a home inspection. If you would like me to email you some bank owned listings, please contact me through my Trulia profile. Kind regards.
1 vote Thank Flag Link Tue May 1, 2012
Cash provides a stronger offer to a seller than someone with 3.5% down. However, paying all cash does not imply the seller is willing to lower the asking price of the home. There are many factors that go into an offer besides price - length of escrow, contingency periods, number of contingencies, etc. Plus, the seller of a bank-owned property may want to provide a mortgage to the new owner! Work with your real estate agent to determine a fair market value on the home of interest, and make a fair offer. And put yourself in the seller's shoes...would you be willing to offer a "good deal" if you were the seller and the buyer was paying all cash?

Sally Blaze
1 vote Thank Flag Link Tue May 1, 2012
Hi Erika

You should buy it on the court steps, that is when you get the best deal.

There are many buyers with Cash right now.

Good luck.

0 votes Thank Flag Link Fri May 4, 2012
Thank you Erika for your question:

You have received some excellent answers, particularly from James Mauldwin, John Sourbry and Terri Vellios.

It appears to me where all cash offers have the most competitive advantage is where the property condition is so poor that the property is not even habitable in it's present condition, and the property itself does not qualify for financing because of the poor condition of the property..

When you purchase a property in poor condition, I recommend that you make certain that your offer is sufficiently discounted to pay for the cost of repairs plus a margin for yourself to pay you to manage the project of fixing up the property and for accepting the risk of purchase of a property that is almost uninhabitable in it's present condition.

You should not expect to have much of an advantage with a property in good condition that qualifies for financing, and I recommend that you make certain that you have enough cash left over to pay for the cost of repairs to a property in poor condition to bring that property up to your standards and make that property habitable again.

Thank you,
Charles Butterfield MBA
Real Estate Broker/REALTOR
American Realty
Cell Phone: (408)509-6218
Fax: (408)269-3597
Email Address: charlesbutterfieldbkr@yahoo.com
0 votes Thank Flag Link Tue May 1, 2012
Bank- owned property is normally good deal according to the market price.It depends what are you dealing with.
0 votes Thank Flag Link Tue May 1, 2012
Hi Erika,

Most banks won't care if you're buying a home with cash or with a loan. They are mostly concerned with the highest possible purchase price which equates to higher bottom line for them for that property.

However, especially in the current market where there are multiple offers and buyers are commonly paying above appraisal value, your all cash situation may be more advantageous.

Hope this helps and let me know if you need help with your purchase or if you have any other questions.
Web Reference: http://www.kendrickkwan.com
0 votes Thank Flag Link Tue May 1, 2012
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