Home Buying in 60657>Question Details

Kevin, Home Buyer in Chicago, IL

Cash buyers can score better deals? myth or for real in the current market?

Asked by Kevin, Chicago, IL Sat Oct 1, 2011

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I would say 75% of my recent buyers have been cash buyers -- all trying to take advantage of the market and get great deals on foreclosures, and a few short sales. Cash sales represent a much more significant portion of the Chicago market (at least 60614, 60657, 60611, 60610 etc) then many buyers realize -- which causes them to over value their position relative to other buyers.

With my buyers we strive for an immediate offer as soon as possible after the home hits the market. We're hoping to secure the contract before it becomes a multiple offer scenario. When this works, my cash buyers can get some pretty phenomenal deals.

Despite our speedy response time, nearly all of our firm's offers end in multiple offer scenarios though -- so eventually the buyer is forced to present a highest and best offer. Cash buyers will generally be at an advantage when competing against similarly priced financed offers, however I have seen banks take a chance on financed offers that were slightly higher.

I could go on and on about strategy for cash buyers, however it can be a little different for each property. Reach out if you would like me to elaborate.
1 vote Thank Flag Link Wed Feb 15, 2012
Cash buyers definitely have additional leverage in most markets and particuarly in today's real estate enviroment however in order to take full advantage of it they need to be prepared to close quickly.

The only real advantage a cash buyer has over a strong conventional buyer (20% or more down, with a pre-approval leeter from a lender stating that a tri-merged credit report has been pulled, assests and income checked and subject only to the properties appriasing) is the their ability to close in half the time. If you don't structure your offer to close within 2-4 weeks you lose some of the leverage you have.

While the Sellers may not be prepared to close this quickly the fact that you're offering to carrys a lot of weight.

Good Luck!
1 vote Thank Flag Link Sat Oct 8, 2011
A bit of both. In any market, there will be some properties on which you can get better deals by paying all cash. On the other hand, the sellers of some properties will need the highest offer, regardless of financing type.

Example: The owner of a property dies. The children inherit it. The mortgage is paid off. The house needs a bit of work. It goes on the market at $300,000. A conventional buyer comes along and offers $290,000 . . . contingent on financing. A cash buyer comes along and offers $250,000. The children just want to sell. They don't want to worry about whether the financing will fall through. The cash buyer likely can get the better deal.

Example: The owner bought the property in 2001 for $270,000. They put it on the market today for $300,000. They've paid down the mortgage a bit, but they really can't afford to bring any money to closing. They need to sell for as close to $300,000 as possible. A conventional buyer comes along and offers $290,000 . . . contingent on financing. A cash buyer comes along and offers $250,000. If the sellers accept the cash offer, they'd probably have to bring money to closing. So they're going to choose the $290,000 offer.

Especially in the current market--the focus of your question--you have to know how low the sellers can afford to go. Never pay more than a house is worth, of course. And certainly considering offering less. Just recognize that some owners aren't in a position to accept less . . . even with an all-cash offer.

Hope that helps.
1 vote Thank Flag Link Sun Oct 2, 2011
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
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Cash buyers absolutely score better deals especially in today’s economy and generally beat out mortgage buyers that are trying to purchase banked owned real estate.
0 votes Thank Flag Link Tue Nov 27, 2012
A cash position is always stronger in any market.
0 votes Thank Flag Link Mon Nov 5, 2012
Too many mortgage deals fall apart for so many reasons, that every seller prefers cash.
Cash should get you the same property for maybe about 1-4% less.
Web Reference: http://www.realtybob.com
0 votes Thank Flag Link Wed Feb 15, 2012
I agree with Seth, Cash makes it easier for all parties involved so that makes it great. But with that being said cash buyers feel they can come in and offer less then asking price and that is not the case a fair offer still needs to made cash or no cash
0 votes Thank Flag Link Wed Feb 15, 2012
On the street, always.

But in regards to real estate, many cash buyers assume they can underbid the asking price by 30% or greater.
It doesn't fly. Hopefully, you understand that a generic question like yours can't be applied to the peculiarities of all properties, but generally the two biggest advantages are that a cash buyer will win a bidding war when the other offers are financing contingent, and the second one is the ability to walk into the closing room with a metal samsonite chained to your wrist, flip it open, and say these seven lucky words, "Count it and give me the keys".
And that, makes you one bad mutha. Non-cash buyers can only dream of such bravado.
0 votes Thank Flag Link Thu Oct 20, 2011
Cash buyers have the most leverage buying property which has already been foreclosed since banks want to get non performing assets off their books as quickly as possible. Cash buyers can also buy properties that don't qualify for traditional loans because the property is not in a habitable condition at deep discounts .
0 votes Thank Flag Link Sat Oct 8, 2011
Cash is king. there are a lot of sellers that would take a cash deal over a slightly higher mortgaged offer.
there is a significantly lower chance the deal will fall apart and the deal can definitely close faster.
0 votes Thank Flag Link Wed Oct 5, 2011
It's for real in any market...........
Web Reference: http://www.321property.com
0 votes Thank Flag Link Sun Oct 2, 2011
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