Question: What are the Benefits to Paying Cash for a Home? in Tallahassee
Good for you for setting aside money to buy a house. Very few buyers are disciplined enough to save enough to pay cash for a house. Prices are astronomical here as compared to the rest of the country.
Depending on the temperature of the marketplace, paying cash has its benefits from a seller’s point of view. Now, some experts might argue that it’s always cash in the end, and it is. But getting to the “end” prevents some buyers who are using financing from getting there.
Reasons Why Sellers Like All Cash Offers
Sellers will often accept an all-cash purchase offer over a higher priced offer with conventional or FHA loan financing. That’s because they know the cash offer is more likely to close. It involves fewer stumbling blocks. And sometimes a bird in the hand is worth two in the bush, so to speak.
* No Appraisal Contingency.
Appraisals are like . . . no, I’m not going to repeat that colloquialism, but everybody has an opinion. Appraisals are not cast in gold. The most common method is reliance on comparable sales, known as the comparative method, which involves choosing 3 properties and comparing those values to the property in question, adjusting upward or downward for updates / missing features.
If a home does not appraise for the purchase price and the buyer is obtaining a loan that requires a 20% down payment or less, the lender will not lend unless the buyer coughs up more cash or the seller discounts the price. There are other options for dealing with a low appraisal, but they can also spell contract cancellation.
* No Loan Funding Contingency.
Even though a buyer may be fully qualified to buy a home at inception, a hundred things can come up during the loan process. Apart from the home itself not qualifying, to conditions for loan approval that a buyer cannot meet, to loans that were once available drying up during escrow.
More commonly, lenders deny loans because the buyers’ qualifications change upon further scrutiny. Maybe the buyer wasn’t fully employed in the same occupation for the past two years, perhaps financial situations were altered prior to closing such as the buyer purchasing a new car or worse, maybe the buyer was unwittingly a victim of identity theft.
* Faster Closing.
A buyer does not need 30 or 45 days to close if the buyer is not obtaining a loan. Once the home inspection and other contingencies have been satisfied or released, closing can take place in as little as seven days, providing the buyer is willing to sign a lead paint waiver.
A faster closing puts money into the seller’s pocket sooner. There are also fewer things that can go wrong in a short escrow period.
Benefits to Buyers to Pay Cash for a Home
When REO lenders have a lot of foreclosures in their portfolios, often the lender will discount the list price of the home in hopes the property will attract multiple offers. Buyers who pay cash for REO homes tend to win multiple offer situations. But there are other benefits for buyers:
* No mortgage payment
* Sense of security
* Available equity in the event of a financial emergency
* Market fluctuations do not matter
* No restrictions on title transfer due to underlying loan
On our new site, we’ve been compiling a list of Tallahassee resources. Let us know if where missing anything! Thanks.
The words “I can’t” can singal the presense of a limiting belief. In many cases, the person hasn’t even imagined doing the thing they’ve been saying they can’t do. This question takes them outside their exisiting model or reality. You’ve probably noticed that people have to see themselves doing it before they do it. So imagin the next time you hear, “I can’t accep tthat offer or counteroffer” you stop and say…
I’m Curious, based on what you told me about your ___, what would happen if you did go ahead and accept their offer? I know you want ___ and accepting this offer will get you what you want. That makes sense, doesn’t it?
Do you know the Leon County area? Are you highly motivated?
Pro Players Realty is looking for qualified Tallahassee Real Estate Agents in order to expand and take a greater stake in this lovely market we’ve called home for the past 10 years.
If you’re interested you can visit our website here, call us at 850.942.7653 or email us at John@proplayersrealty.com
Receive 25% off commission on purchases over $250,000 today.
Rejected offers cause buyers disappointment and heartache. A seller doesn’t have to rip the buyer’s offer in half for buyers to feel like their hearts have been ripped out. All a seller has to say is “NO,” and your offer is rejected.
Here are the top four reasons purchase offers are rejected:
Offer Rejection Reason #1: Objection to Lower-Than-Listed-Price Offer
1. Sellers can easily feel insulted. If a buyer offers too little, the seller might believe the buyer is not a serious buyer.
2. The seller may be too angry to respond and, therefore, will reject the offer outright.
3. If the house has just come on the market and is a fresh listing, the seller might feel it’s too early to look at less-than-list offers.
4. In most states, sellers are not required to respond to offers less-than-list price.
Offer Rejection Reason #2: Selling Agent is a Jerk
Agents who possess the social graces of a chimp should have their real estate licenses suspended because nobody wants to deal with them. Agents without manners are wasting their time and making their buyer’s lives unknowingly miserable. If a selling agent annoys the listing agent, especially during a multiple offer situation, it reflects poorly on that agent’s buyer. Make sure your agent doesn’t commit any of these sins:
1. Screams or raises voice on the phone or in person
2. Forgets to say please or thank you
3. Makes demands and issues ultimatums
4. Insults the listing agent by printing out comparable sales or market data, inferring the listing agent is stupid or ignorant (even if it’s true)
5. Maintains a demeaning attitude
6. Approaches the listing agent in an aggressive or pushy manner
7. Does not display professionalism
There is nothing to prevent a listing agent from taking two identical offers to a seller and saying, “I don’t like Agent A, but Agent B is professional. Choose which offer you want.” Do you really think the seller will choose Agent A’s offer? Don’t ever forget that this is a networking business; being polite and respectful earns kudos many times over. Don’t let your agent sabotage your chances from the get-go. If it’s not the price, often it’s the agent!
Offer Rejection Reason #3: Listing Agent Represents Competing Buyer
A little known practice among consumers is the variable or dual-rate commission discussion that listing agents sometimes specify and negotiate into listing agreements. What this means is the listing agent makes an agreement with the seller that if the listing agent ends up also representing the buyer, the listing agent will reduce her commission (because she’s earning both sides of the commission).
For example, if the listing agent is going to receive 7% commission, 4% for listing and 3% that she gives to the selling broker, she might agree to take 6% total if she represents both sides of the transaction. Therefore, if your own agent writes an offer, the seller will pay more and net less. Ask your agent to check MLS to see if the commission is variable.
Offer Rejection Reason #4: Buyer Did Not Meet Seller’s Specific Needs
Selling agents should always call a listing agent to find out if the seller has any specific requirements or hot buttons. If so, write them into the offer.
1. If the seller needs a long escrow, offer a longer closing date.
2. If the seller wants to see a substantial earnest money deposit, increase the deposit.
3. Sometimes the financing terms stated in MLS are not met. For example, if the seller will accept only cash offers, don’t expect an offer with FHA terms to get accepted.
4. If the seller is concerned about repairs, offer to buy the property “as is,” after providing for a home inspection.
5. Maybe it’s a lender’s preapproval letter that the seller wants; the point is you can’t know how to satisfy the seller’s demands if you don’t ask.
Not all homes that go into default go all the way through foreclosure. Many sell before the notice of default is finalized. Home buyers and investors are attracted to short sales and foreclosures because they want to buy a home for less than market value. Sometimes sellers in default and buyers who want a short sale or foreclosure can see eye-to-eye and enter into a profitable transaction for both parties.
But it’s not for the faint of heart. Distressed home sales are often complicated and sellers have rights when in foreclosure. Both sellers and buyers should seek legal advice before entering into such a contract.
Sellers in Foreclosure
It’s all too common for sellers in foreclosure to want to ignore the problem and hope it will go away. Some stick their heads in the sand. But help is available. Sellers in foreclosure have options.
* How to Stop Foreclosure can help sellers keep a home through reinstatement, forbearance, mortgage modifications or repayment plans.
* Short Sales for Sellers clarifies how to transfer title to a buyer before the redemption period ends by persuading the lender to accept less than the unpaid mortgage balance. Not all lenders will accept a short sale, however. This covers what lenders want from sellers. Negotiation is key.
* Foreclosure and Short Sale Taxes discusses how the I.R.S. will treat a foreclosure or short sale for tax purposes. It’s called debt forgiveness, and until tax rules change, sellers could owe the government taxes even though sellers lost money on the sale.
Buying Foreclosures & Short Sale Homes
Not all foreclosures and short sales are profitable. To pull a home out of foreclosure, buyers need to make up back payments to the lender, pay all imposed fees and either pay off the loan or make arrangements to sell the property. Few lenders will let a buyer assume an existing obligation.
* Buying Distressed Homes involves three ways to purchase: from the seller in foreclosure, negotiating a short sale or buying from the lender after a public auction. Read this carefully as investors in California cannot be represented by a real estate agent.
* Buying Short Sales details why the process is complicated and can take much longer to close than an ordinary transaction. Not all short sales are profitable, and this article explains why.
* Buying Foreclosures before the home goes to a public auction involves negotiating directly with the seller. Buyers also have the option of bidding on a foreclosure at the public auction, but read the procedures first.
* Drawbacks to Foreclosures talks about the repercussions and inherent problems that are often present when buying a foreclosure. Buyers who bid at public auctions will benefit from getting as much information as possible beforehand.
* Defaults Hit Home Values. Nearby homes will feel the effect, which could pull the market value of a newly purchased short sale or foreclosure even lower. This article goes into detail about how appraisers determine the value in neighborhoods with distressed home sales.
Fixing Up Foreclosures & Short Sale Homes
One way to make money in real estate is to “buy low and sell high.” Couple that principle with fixing up the home or improving it, and the amount of profit can be even greater. Besides, many distressed homes fall into disarray and require repairs.
* Repairs Before Resale can boost bottom-line profit. But not all repairs or improvements return 100% of an investment. Read why.
* Top Do It Yourself Mistakes. This article covers 10 common errors home owners make when trying to flip a house. Don’t think about buying a foreclosure until you read this.
* Fix-Up and Sell is a five-part series with links at the end of each article to the next. It’s a first-hand description involving simple to complex remodeling projects that were completed on five flipper homes.
A new study for the Associated Press, conducted by Marcus & Milichap Real Estate Investment Services, shows the difference between owning a home vs. renting has fallen to a record 20-year low. The study relied on data from the last quarter of 2009. The researchers compared the monthly mortgage payment for a median-priced home with a median-priced rental to come up with a median gap of $256 a month. In some parts of the country, the difference is only $100.
I don’t believe the study considered the tax benefits to a homeowner, just the difference between owning vs. renting. When you throw the tax write-offs into the equation for such things as interest and property taxes, I’m betting the results would show that homeowners actually come out ahead.