Good luck to you,
Unwavering Commitment to Service
Paying cash puts you in a stronger position than a buyer that has a mortgage contingency, has another home to sell, etc. For a seller who's looking for a fast closing, money definitely talks! I'm not familiar with the Florida market but I hear they've been hit hard with foreclosures. Sellers should be eager to sell to someone not having to go through the banks and the tighter restrictions the banks have imposed.
But at the same time, if you are looking to lowball vs. the true value of the units in todays market because you are paying cash than I can understand why the agent you spoke with said that. Paying cash doesn't make the unit worth any less than its value today. A seller can surely accept less but its not a guarantee.
Good luck and find another agent if you're not happy with this one!
Gina Chirico, Sales Associate
Cash is a good bargaining chip in the case of a low priced fixer-upper:
The Lenders do not want to loan on fixers, they want it Turn-Key.
So the majority of fixers are going to invenstors with cash.
You didn't detail all of your circumstances and desires, but you might want to put 50% down, get a short term conventional loan on a fixer and build some equity at the same time.
This might make some sense from a tax standpoint.
Understand that I am not an expert on this; maybe I'm just giving you some ideas.
good luck and may God bless
Cash helps, but to the seller any sale they don't finance themselves is cash to them. Removing the need for a bank loan removes one element of risk to a seller, but I think what your agent may want you to realize is that it doesn't automatically mean an additional huge discount over another buyer with 20% down and a strong pre-approval letter.
One other thought, if you can get a 10 or 15 year mortgage below 4% you might want to reconsider parting with your cash. Rates are incredibly low and it may make sense to weigh your options.
Oops. Sorry. I'm not supposed to say that.
But of course you have more bargaining power. Depending on the seller and the seller's motivation, you may only have slightly more bargain power, or a whole lot.
Whether or not it's a good idea to pay all cash is another matter entirely. Part depend on how much better a deal you can get. If you could knock the price down by $20,000 with an all cash offer, it'd likely make a lot more sense. However, you also don't want to spend every last liquid cent you have on an illiquid investment like real estate. Also, of course, there are tax implications. And finally, of course, there's your comfort level/peace of mind. You're obviously comfortable paying all cash, and you'd obviously like to get a better deal by paying all cash. But for those other factors--your cash liquidity and the tax implications--you should check with your accountant.
Just a few additional cautions: Make sure you're not overpaying. Even if you get something knocked off the listing price because you're paying cash doesn't mean that you're getting a really good deal. Your agent should run CMAs on such properties and let you know what they're really worth. And don't buy just because you think you're getting a good deal. It's pretty broad to say that you're open to "a town home, condo, or house." But you're going to have to live there. Narrow it down a bit. Figure out whether you want your bargain to be a townhouse, a single-family home, or a condo. That should occur right up front.
Hope that helps.