I plan on buying a foreclosure in the Atl area in the $700 to $1mil range. I will be offering cash. How will the "cash" payment effect the?

Asked by Jt2212, 30342 Tue Mar 30, 2010

willingness of the banks to "make a deal?

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18
Mike Price, Agent, Atlanta, GA
Tue Dec 20, 2011
The banks like cash offers but they don't have a lot of buyers in your price range. I would leverage your money in this situation. Cash is king and it is great to have a lot of it on hand. I would but 25% down so there would be no PMI and save the rest for repairs that will need to be done.

Mike Price
Keller Williams Cityside
678-559-7826
pricesellsatl@kw.com
1 vote
Jeff Hutchis…, , Chicago, IL
Mon Jul 19, 2010
Hello jt2212. Mortgage rates are at all time lows right now and it makes sense to borrow the money and put that cash some where else. http://www.current-mortgage-rates.net
0 votes
Robert A Whi…, Agent, Roswell, GA
Tue Jul 6, 2010
Hi Jt2212,

As I mentioned in a previous answer - yes - banks are more willing to make a deal if you have cash. However, banks may also try to limit the time to get your due-diligence done in cash transactions. The Wise Buyer Program provides over $5000 worth of free on-the-spot structural and major system evaluations - this invaluable service tells you exactly what you need to know as a buyer or investor, for example: is the price right, or are the defects so bad you need to keep looking. There is nothing else like this program in metro Atlanta - for more info see the website below.

Regards,

Robert Whitfield
Broker/Owner - Realtor
Professional Buyers Broker
Relocation Expert
ICC Code Certified Building Inspection Expert
Advantage Realtors
678-585-9691
877-787-7167
“Know what you’re buying ...Before you submit an offer!”
0 votes
Charles Bagl…, , Atlanta, GA
Mon Jun 28, 2010
Since FMLS is only showing 4 houses that fit your criteria in 30342 versus 53 houses in that price range. You may wish to rethink your plan. Cash buyer means more to private seller than bank. Also you may wish to talk agents who work in these areas.

I know of one seller in 30342 zip code has just invested 100s of thousands of dollars in their home and now has to move. You will not find that on a listing.
0 votes
Susan B Colu…, Agent, Port Saint Lucie, FL
Sun Jun 27, 2010
I deal with a large number of banks............. Buyers in this price range don't come along everyday. You should have a good chance of negotiating quite a bit. They will of course want proof of funds submitted with any offer. By paying cash you eliminate the need to qualify thru their in house lender. They will look closely at any inspection time frames as they will want to get past that issue. I would put in the shortest time frame possible for inspections. (line up your inspector ahead of time). They will also look at the closing date. Most of my lenders love to close prior to the end of the month.
0 votes
Robert A Whi…, Agent, Roswell, GA
Sun Jun 27, 2010
There are plenty of deals if you know where to look. Without question, you are in a better position as a Cash Buyer on foreclosure deals particularly, and yes, the banks will be more negotiable. Proof of existing Funds on your bankers letterhead or if your funds were deposted in your Buyer Brokers Escrow Account or your Closing Attorneys Escrow account are sure signs the deal will go through - that is far more assurance to the bank than a buyer who comes with a loan committment letter than can and has been dishonored by thier lender at the last minute.

I would be happy to help you locate some top forclosure deals to see and provide some unique services that are invaluable to purchasers buying
0 votes
John Sabic, Agent, Atlanta, GA
Thu Jun 24, 2010
Cash is the king in any price range but especially foreclosures in the million price range and only if you are flexible enough with home style, area and time. I am closing on the house next month where we negotiated for our client 30% discount under asking price and home is about 50% under neighborhood comps but this is in lower price range. If you are fixed with the neighborhood and style and you don't have so much time to wait I would say you can still get about 10% discount if the asking price isn't already good deal. I have to underline one thing there are other people out there looking for the same thing so it is very wise to have your proof of founds ready and if you like the house and it is extra good deal do not hesitate to put an offer otherwise someone else will (on very good deals this happens al the time).
Web Reference:  http://www.atlantamyhome.com
0 votes
Ben Hester, , Atlanta, GA
Thu Jun 24, 2010
Properties in that price range are selling very slow these days. Not many buyers are going for them and it is hard to get financing because of jumbo loans and because it is so hard to come up with comps - not a lot of stuff will have sold in the past 3 months in a one mile radius. This is especially true in the Northern suburbs. Last time a checked there was about 10 years worth of inventory.

The banks aren't in a position to bargain much. You should be able to get an absolute steal, and if the bank gives you trouble, walk away and get a steal of a deal on another property!

Way to buy at the right time, my friend!
0 votes
Judson Whitl…, , Atlanta, GA
Tue Mar 30, 2010
The truth of the matter is at the closing table all offers are cash to the seller. From a negotiating sandpoint a verifiable cash buyer is in a stronger position because the accepted buyer's contract is the most likely to close. (has fewer variables) You should consider properties other than foreclosures and short sales when looking at properties. These tend not to be the best properties, and therefore not always the best values. You should be looking for the best value for your $$. This is not always a foreclosure.
0 votes
Aaron Hofmann, Agent, Marietta, GA
Tue Mar 30, 2010
It is largely a misnomer that buyers think that the bank will sell to a "cash" buyer and give them a significantly better deal than a buyer acquiring financing. In reality, at the day of closing both types of buyers are "cash" buyers because the bank will get a check in both circumstances.

While a bank will generally always give preference to a "cash" buyer if comparing equivalent offers with that of a buyer seeking financing, it's not going to slash the price for you. It doesn't make financial sense to give you preference over a better offer that is being financed.

Keep in mind that one way banks increase their comfort level with buyers seeking financing is that they will require the buyers to get pre-approved with them as well. So if Bank A's REO department is handling the foreclosed property, they'll require the buyer to be pre-approved with Bank A's loan origination department. If their own company will pre-approve the buyer, they don't really see much difference between you and the buyer seeking financing.
0 votes
Charles Bagl…, , Atlanta, GA
Tue Mar 30, 2010
Only matters if you are willing to pay more than appraised value. Lenders for buyers will always want appraisal. Question you must decide is paying more than appraised value a good decision. You need to be sure the area going to be stable or improving.

Your zip code okay in most areas. There are others that is okay as well. But some luxury home areas have large inventory of forclosures that have not been put back on market. How shown and sold homes in high end gated communities that roll them out as inventory moves.

Like everyone else I want your business. Let me know if I can help.
0 votes
Ken Guillen, Agent, Duluth, GA
Tue Mar 30, 2010
Dear Jt2213 Home Buyer,

The key to any sale including a "cash sale" is to initially, do a very tight competitive market analysis (CMA).
Secondly, we check the tax records and determine what the mortgage amount the bank is holding. It could be below the market and quite frankly, that is desired because it helps your equity position. When making a cash offer your closing cost (attorney's fee, title search,transfer tax & title insurance) would be around $2,000 in this price range. A normal sale with an 80% mortgage or 20% down (80% X $700K) would be $560K and have closing cost around $12,000. On that basis we could reduce the price by $10,000 because of the lower closing costs needed on a cash sale. the initial offer of knowing the pay-off and pushing the ofer as low as possible is the key. Beyond price is the condition and even though the foreclosure homes are "As-Is" sales, the purchaser has a time frame (due diligence) to complete an inspection and back out if the property proves to be unsuitable. Sometimes a bank will allow for a repair to make a sale. If we approach things in a positive manner arrangements can be made. I have worked in foreclosures my entire 16+ years in real estate and was a property adjuster earlier, thus I am a very good juge of condition. Let me know if you have questions. I work on a no-hassle and invitation basis only!

Ken Guillen, Broker
http://www.newlifereg.com
0 votes
John Sabic, Agent, Atlanta, GA
Tue Mar 30, 2010
I would say it depends on the property, area (zip code) and the seller (the bank). If you give me a particular property I can give you my prospective but in many cases cash is the king.
Web Reference:  http://www.atlantamyhome.com
0 votes
William M "M…, Agent, Suwanee, GA
Tue Mar 30, 2010
Hi Jt2212,

By having proof of funds the bank will not be concerned about the financing of the transaction which is a plus. They will however possibly look to have a quicker closing which will put the burden on you to have all your inspections done during what could be a shorter due diligence period. The bank will still have a minimum amount that they are willing to accept on the property and quite frankly we are seeing these percentages all over the board. Have a complete market analysis performed so that you have a true picture of where the value of the selected property falls and work downwards from there.

Feel free to let me know how else I can be of service.
0 votes
Stephanie Mc…, Agent, Canton, GA
Tue Mar 30, 2010
Your result will depend on not only the purchase price but your entire offer package as a whole. If you work with an experienced buyer agent she will know how best to present your cash offer and will make recommendations that will position your offer in the best light. All offers are cash at closing and it is not uncommon for a bank to make a decision against the cash buyer if there is something else in the offer package that spooks them, or if it's just not a strong offer overall.
A strong financing buyer is just as good in residential real estate as a cash buyer and I know that goes against conventional thinking. You have to remember that there are many aspects of a real estate transaction that can make or break the deal. The purchase price is only part of what any seller needs to consider when presented with an offer.
So, first step, are you already working with an experienced buyer agent?

Stephanie McCarty, ABR
REMAX Greater Atlanta
404-457-8089 cell
http://www.stephaniemccarty.com
stephaniemccarty@remax.net
0 votes
Amy Weeks, Agent, Decatur, GA
Tue Mar 30, 2010
I agree with David. I've had a bank take my offer (in that same price range) that was financed, over a cash offer - my offer was $3000 more. If they had been the same price, of course it would have been a different result.
Feel free to call me if you have additional questions - 404-401-1460.

Amy Weeks
Keller Williams Realty Metro Atlanta
404-401-1460
amyweeks@kw.com
Web Reference:  http://www.amyweeks.com
0 votes
Dona Cardenas, , 30338
Tue Mar 30, 2010
In today's market, being a cash buyer actually does matter. With so many of the loans not reaching the closing table, I know as an agent who sells bank properties, my asset manager prefers cash because we can closer quicker and we are assured of closing. Also, even though today's contracts are written as cash offers there is still a loan to deal with and a buyer. Cash buyers are usually more serious and you know upfront if the deal will work. So while you may not get a huge savings off the price, you will be the first accepted offer when competing against buyers with loans.
If I can help you with your search I do have access to foreclosed/REO properties.

Dona Cardenas
Associate Broker
0 votes
davidwbrower, , Woodstock, GA
Tue Mar 30, 2010
If you mean by "make a deal", will you getter a better price by paying cash? it's been my experience in both selling for two banks and helping several buyers purchase foreclosures, not really going to make that much difference in sale price. Bank's have a target net they want to hit based on formulas, appraisal, days on market. They don't deviate from those guidelines much regardless of form of payment. Maybe a few percent but nothing dramatic. As far as maybe accepting your offer over another buyer's financed offer, makes a big difference. You should consider using an agent with experience in writing and receiving offers on bank owned properties. It's a large transaction and you should consider being represented by an agent if you don't already have one. Let me know if I can help further.
Web Reference:  http://www.davidwbrower.com
0 votes
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