Home Buying in New Jersey>Question Details

Aleksey Tsym…, Home Buyer in Paramus, NJ

Why would bank prefer cash buyer of a foreclosed property to a buyer financing a purchase?

Asked by Aleksey Tsymbalov, Paramus, NJ Tue Mar 16, 2010

I wanted to make an offer on a foreclosed property with a listing agent. However, he told me that the bank is going to go with a cash buyer. Why would a bank prefer one to the other one?

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Answers

6
Cash is indeed king.

Put plainly, banks want certainty. With cash, banks can reasonably assume that a deal will go through. If the prospective purchaser intends to finance the deal, there exists the distinct possibility that the financing in question will fall through. Consequently, if faced with a two identical prospective purchasers with the exception that one requires financing while the other does not, the bank will go with the party that does not require financing and will pay in cash. This is because the bank's probability of actually closing the deal is greater, as I mentioned above, with the cash purchaser who doesn't rely on a third-party bank that might withdraw funding at the 11th hour.

If you have a question related to a specific circumstance, shoot me a line. My email address is lawrence.friscia@friscialaw.com.
Web Reference: http://www.friscialaw.com
1 vote Thank Flag Link Sun Mar 21, 2010
Cash is KING! Come on! You get your money and can quickly transfer the property without any waiting. The banks are fraught with problems regarding disclosure and layers of complex paperwork. Delays are the news of the day.

Why would you want a financed loan over a cash deal? Why risk it?
0 votes Thank Flag Link Wed Mar 17, 2010
If you were selling hamburgers and I was hungry, which offer would be more appealing to you?

1. Here is $5. I will take the deluxe burger. Thanks.
2. I will gladly give you $5 next Tuesday for the deluxe burger that I will eat today.

It is easy to see why the seller would rather have cash than a promise of cash.

On the other hand, if the promise was for $6 or $7 next Tuesday, you might be willing to give me the burger now and wait for payment.

If my offer was for $8 next Tuesday but was contingent on the burger tasting o.k., not upsetting my stomach and not causing gas, you might take the $5 today if I took the burger “as is”.

Finally, you need to get yourself an agent so you can get sound advice on how to best write an offer that will get accepted.
0 votes Thank Flag Link Tue Mar 16, 2010
Aleksey,
Ashtin pretty much hits the nail on the head. The faster the banks can get this foreclosed off the books the better. Cash buyers can provide this by being able to get a quicker closing. Only on occasions where the offer that is being financed is higher will the bank consider it.

Good Luck

Darren Moreno
Nu Home Finders
"Se Habla Espanol"
Short Sale and Foreclosure Specialist Certified (SFR)
Web Reference: http://www.houseoffloridarealestate.com
0 votes Thank Flag Link Tue Mar 16, 2010
A bird in hand is worth two in the bush.
Cash talks everything else walks.
The only time banks would pass on a cash buyer when the price is heavily discounted.
Lesson ........ money with less attitude makes lots of friends.
Money does not impress me as much as a buyer with a great credit score and the intelligence to use it.
Unfortunately banks have little intelligence and care less.
0 votes Thank Flag Link Tue Mar 16, 2010
Banks sometimes go with the financed offer as it is a higher offer. Cash does not always win as much as a cash buyer would wish. Financing is never a problem when cash is already in hand. No problems should come up to block the sale.
0 votes Thank Flag Link Tue Mar 16, 2010
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