quote:
My goodness.
Perhaps you were answering a different question than I was?
Because the question I answered had nothing to do with two equal offers, 1 cash and 1 financed.

The question I answered had to do with whether or not a cash transaction would bring a discounted price.
Do you believe a cash transaction will bring a discounted price?
If so, why not simply respond to the OP with the suggested amount he should discount his cash offer.
Frankly, if you have some experience with it, I'd be interested in your information on cash discounts for real estate purchase too.

Sorry, I wasn't trying to flame you. There isn't a discount % I can give you. The purchase price of a home is determined by the buyer, something is only worth what someone is willing to pay for it.

With all other things being equal a cash buyer is more desirable than a buyer who finances (financing may fall through, deal could be contigent on the sale of another house)

A stronger offer gives you more negotiating power. So IF a buyer uses that position to negotiate a better deal, I would expect that person to pay less for an asset. EVERYTHING in real estate is negotiable.

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Posted by kaaj24

Dallas

Member since Jan 2010

952 posts

Posted on 3/12/11 at 7:11 am to foshizzle

quote:
quote:

A cash buyer trumps a buyer who needs to finance every day of the week.

You must be talking about a buyer who hasn't gotten pre-approved yet. Yes, I can see it then but if you're serious about making a purchase you get that taken care of ahead of time.

There shouldn't be any difference for a pre-approved buyer/borrower.

Being pre-approved and approved for a loan are two different things. Getting pre-approved they run your credit score and collect some basic info.

Getting approved for a loan you must provide documents proving your income, assets, home insurance policy, etc. House must get appraised which is huge. IF loan to value is out of whack, no loan for sure. This is where you get approved by the mortgage underwriter.

There are so many variables with a real estate purchase but with all other things being equal a cash buyer brings a stronger offer than one who needs to finance.

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Posted by smoke4life

Houston

Member since Feb 2006

688 posts

Posted on 3/12/11 at 9:56 am to foshizzle

quote:
For example, if the house cost 50K then your interest payments are horrible (like credit card rates) and the mortgage needs to be paid off ASAP. If the house cost 5 million and the bill is only $1K monthly you should pay it off as slowly as possible and invest instead.

I keep coming to this conclusion after all is said and done. And the numbers are just so freaking close to going either way.

This is a nightmare I went through with attempting to purchase a foreclosure last year with financing:

I was purchasing a home with great bones in an up and coming neighborhood, it had 3 bedrooms and a garage apt with 3 buddies committed to living with me and paying rent. (total rent > mortage + taxes). So I was going to finance.
The home had been ripped apart after the foreclosure( previous owners took everything of value: central ac, wiring, electric box, toliets, I mean everything. There was prob 15 things that needed work/installation for the lender to approve the loan. But the bank was not putting a dime into the house, it was being sold as is. It was about 3 weeks of constant phone calls with realtors, banks, contractors, lawyers that I just said F it I'm out.
I agree cash from buyer or lender is exact same for seller, but the more pieces that have to come together, the greater the likelihood of a problem.

Thanks to all who posted some advice.

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Posted by foshizzle

Washington DC metro

Member since Mar 2008

40599 posts

Posted on 3/12/11 at 6:41 pm to kaaj24

quote:
Being pre-approved and approved for a loan are two different things. Getting pre-approved they run your credit score and collect some basic info.

Actually, I always thought that was getting pre-qualified, not pre-approved. Pre-qualified means just the basic info and such like you said and doesn't mean a lot. Pre-approved (which is what I was referring to) means the bank says they are committed to lending you the money provided the property is ok, and that's a big difference. It is much more than just the bank saying "yeah, we did a superficial check". It means "he's filed a formal loan application and we are committed to lend up to x amount if the property passes muster".

I suspect we're talking about the same things but using different words.

This post was edited on 3/12/11 at 6:45 pm

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