Profile picture for meshkinas

If I can pay for a condo directly from my savings (no bank loan ) do I have a negotiating advantage?

  • May 23 2010 - Mattapan
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Answers (29)

As a Realtor that has been selling a lot of foreclosures and short-sales in Lake Tahoe, I can confirm, that yes cash offer will often get higher acceptance rating when offering on distressed properties.
However, if it is a standard sale, and you can show solid pre-qualifications, loan would do just as well.
Before you get rid of all your liquid assets, see if there is competition on the condo, if no, try to get a loan (many lenders now have rigorous standards for condo lending, such as the complex has to be more than 50% owner occupied). Those mortgage interest tax deductions are nice!
If there is competition, and/or it is a distressed property, offer cash.
  • April 25 2011
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Yes, you will have some kind of negotiating power but your offer should be comparable to market value also.  Low-balling an offer may not help even if it was all cash because there could be other qualified buyers interested who can put the 20% down, have a pre-approval, quick closing date and more favorable conditions.  Hence if this was the situation the seller could opt for one of those offers and you will lose out for low-balling even with cash financing. 

  • April 25 2011
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Profile picture for wetdawgs
"Cash Buyers receive top consideration from the Lenders."   Puzzled.  Cash buyers don't need a lender, so is there something in this phrase I'm missing?  Perhaps you are referring to short sale/foreclosure purchases?
  • April 23 2011
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Cash Buyers recieve top consideration from the Lenders. However, lowball cash offers generally do not win over a higher offer with strong financing and good cash downpayment. Keep your offer within reason.
  • April 23 2011
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Most likely you could get it for a slight discount.  However since you are paying cash you will have to do your own due diligence about owner occupancy, reserves, FHA approvals and appraisal.  These are crucial because you always want to be able to resale it to give it value.

  • April 23 2011
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TODAY...YES...Condo Financing is harder than ever to get,
So if you are paying cash....Cash is king.
  • April 14 2011
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As many of the other folks have commented, the easy answer for this is a resounding "Yes." Not only can you speed up the process by not having to involve a third-party lender, but, to be frank, the term "Cash-Buyer" simply makes a seller sound much more comfortable in the selling process.

Best of Luck!

Eric Rollo
Roots Real Estate
  • January 24 2011
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Profile picture for dacolan
TerritoryRE,

You'll notice the links you've been leaving at the end of each post are being removed. Spam and self-promotion is against Zillow's Good Neighbor Policy.

And while serial drive-by posting in an effort to dominate the front page to market yourself/build your post count may not be against official Zillow policy, it is poor netiquette and counter-productive. You will turn more consumers off than gain positive share of mind.
  • January 07 2011
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Profile picture for TerritoryRE
Short answer is yes, even with REO's (however these are headache purchases even with all cash). The ability to pay all cash removes a lot of risk for the seller and also allows for the deal to close very quickly.
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  • January 07 2011
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Hello Meshkinas,

Depends on the property.  In my experience,  asset managers for REO's LOVE cash buyers due to a quick close and no complications.  If it's a regular sale, teh seller may not care since they will be getting their funds at closing anyways.


Jeffrey H. Carter, ABR
[contact info removed by moderator]
  • August 02 2010
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Normally the lack of a mortgage contingency is a point in your favor. The seller doesn't have to worry about you not getting your financing at the last minute. This year I think its twice as good because the banks are so nervous that buyers who would normally fly through are getting shut down.
Having a cash sale this year should get you a better deal!
Hope this helps Jeff Persons ABR  http://blog.wesellboston.net/
  • July 28 2010
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Profile picture for Isklopot
Depending on the condo you may have an incredible advantage.  In many condos the percentage of owner-occupied units has fallen below the standard used by lenders to approve loans, meaning it will be nearly impossible for a "typical" buyer to obtain a loan to purchase in that particular building.  With cash you wouldn't have that problem, and may be the ONLY willing/available buyer the seller has or will see.

Absent that situation, agree with those who see limited benefit.  Also, the way you asked the question indicates you're not a professional investor.  Make sure to use your due diligence--check condition of building/common elements (roof, heating/HVAC, etc), association financial reserves, number of units not paying dues.  There is a reason lenders won't make loans once the percentage of owner-occupied units falls below their standards--they see too much risk.   Go in with your eyes wide open.
  • July 23 2010
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This puts you in a very good position since the Seller does not have to worry that you may not get the loan. If multiple offers are submitted on a property and we are seeing that happen again when the property is priced right and desirable, you do have an advantage over someone who has to go through the loan process. You also have the advantage of closing faster which means something to some but not all sellers. A seller isn't going to sell the house for less than it is worth just because you have cash, would you?  All and all it depends on the situation, but in general, yes, a cash buyer is a very good buyer!
  • July 23 2010
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It will depend on the seller...are they motivated?  How long has the property been on the market?  Normally yes but this is not always the case....it will make a difference with some sellers you must find the right one.....Best of Luck!
  • July 22 2010
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Generally speaking the answer is yes.   The fact that you do not have to get a loan, and an appraisal is less risk to the seller.  When a buyer needs a loan to purchase, there is more obstacles that can get in the way, therefore a greater chance of the deal falling part. Even the the seller will net the same with a cash offer vs. a loan, the seller is often more pleased with a cash offer due the "less to go wrong" factor.
  • July 21 2010
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Profile picture for Mr Caveat
oh you get the advantage, but it isnt about enticing the seller... oh no. you get the advantage by convincing the listing agent to push that seller really hard on your behalf.  a 14 day closing is enough to get at least a third of them salivating for a payday, ESPECIALLY in this market where they might not see another offer for 2-6 weeks.

besides, an offer is an offer and the fair market for the house isnt 1 red cent more than someone will pay for it, cash or not.
  • July 21 2010
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Profile picture for Gullicksen Group

So often cash buyers think they will get a discount on a property because they are not obtaining a loan, so there is a lower risk to the Seller that the deal will fall apart. I'm here to tell you that for most Sellers all-cash offers aren't worth much of a discount.
Of course the circumstances will vary depending on the market you're in, but in general if a Seller has to wait a few extra weeks to get more money in their pockets they will take the relatively slim risk of going with an offer that requires financing. At the end of the day they don't care where the cash comes from. They care about how much of it is going to end up in their hands.

  • July 21 2010
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Cash is usually king!  There are exceptions to everything!  But, you are much stronger than someone getting a loan.  The funds are guaranteed funds and there is no waiting for approvals from some underwriter.  Just be sure that you aren't trying to get such a great deal that you forget to protect yourself in other ways.  Make sure you have a Realtor that you can trust in your corner who has your back every step of the way.
  • July 19 2010
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I know I am late to the party here with an answer.  But when buying a Condo today you may have big advantage in paying cash.  Condo's can be difficult to finance especially if deemed non-conforming or have no ability to be FHA approved.  In Boston many condo's that could in the past be financed with a low down payment now require a substantial down payment.  Many first time buyers need the FHA loan or need to at least get mortgage insurance. The poster most likely has purchased there new condo but for those with cash you can get deals.  So it will depend on the condo complex, owner occupancy, soundness of the deal.  But I always advise on condos; do your due diligence especially in small complexes in Boston.  A three unit converted two years ago you need to know, if any of the other units are paying their condo fees etc.   You don't want to find yourself in a situation where you are carrying all the units on common expenses and to only find out too late the property needs a new roof or other major expense.
  • July 19 2010
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Yes, you do have a negotiating advantage and it is important for your buyer's
agent to position it that way. For the seller, the advantage is that they are "done" when the purchase agreement is signed. No waiting for the financing contingency. This gives them more time to plan and less time wondering if the appraisal will come in at value and if the credit check now being done at the 5-10 day period  before closing will check out. Use this to your advantage.
  • July 19 2010
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Yes, you may have a negotiating advantage because your offer is strong, there will be no funding contingency which means you will have a quicker, cleaner closing than most buyers!
  • July 01 2010
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It really depends on the seller.  If closing quickly is important to them than you have a distinct advantage.  You can close in less than 15 days with a cash deal.

Also with cash deals you can remove the financing contingency which does make a seller feel more comfortable.

I would say in most circumstances you would have a negotiating advantage by paying cash for your home purchase.
  • May 27 2010
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Profile picture for Randy Mabry

I would say yes.  This enables a quicker closing without the possibility of not getting a loan or funding.  This does put you in an rxcellent negotiating position.  Good luck.

  • May 24 2010
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Profile picture for wetdawgs
The biggest advantage you will have is that you will not have a funding contingency, so if there is competition for the property, chances are good that you will be the winner.   

However, you will not get a price reduction for cash.
  • May 24 2010
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Most definitely! A cash buyer is fantastic in any situation! With condos especially do to the difficulty financing them through FHA recently. You absolutely have a strong advantage!
  • May 24 2010
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Profile picture for ABBAUSA
I believe the direct answer is yes. It is definitely an advantage in a short sale. Investing a large amount of your cash in the condo may not be to your advantage. You will be getting maybe 5% return on your money (a good rate for a good fico score). Better than what savings and money markets  are paying just now. I think I would get a 50% loan and keep the cash for other investments, etc. Cash is King in this economy.
  • May 23 2010
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Absolutly YES! It may not matter to the seller where the money comes from, but it certainly does matter to them how fast it will come and how certain it is to come.

know that, all other things being equal, a seller will chose a cash offer with a quick close over a financed offer. The question is if you are not competing with another offer how much more valuable it a cash offer. The answer to this will very from seller to seller, but a local agent is your best resource to help you get an idea of what value a cash over might have in your location and price range.
  • May 23 2010
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Dear Buyer,

As mentioned by Ofe, in either case the payment at the closing table is a check, be it direct from your savings account or a lender. However, if you waive contingencies like home inspection make a fair market value offer and a speedy close date. Those factors "May" help get your offer accepted. But honestly, it doesn't matter where the cash comes from to the seller.
  • May 23 2010
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Profile picture for Ofe Polack
It all depends, if that is best for you.  The mode of payment is only but one aspect of negotiations.  As long as the seller gets paid he should not care how the money comes about.  Beside the mode of payment, you have to negotiate any concessions (seller pays closing costs, buys Home Warranty, etc) Home Inspection and the timing of closing.  Many buyers are disappointed when their lower cash offer is not accepted and instead a higher FHA or conventional offer is accepted, that is because the seller wants the best offer and a higher offer is oftentimes the best offer regardless whether it is cash or mortgage.
  • May 23 2010
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