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Is it a good time to buy a foreclosure with cash?

I am thinking of buying a Bank foreclosure down south. I have enough saved to buy a small home and was wondering if  I make an offer,would the bank consider it,even if it is under their selling price.
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December 19 2008 - Knightdale
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Answers (28)

You will never learn of the process and where you have to be to purchase a "bank owned" property today until you set foot in the waters...It may take you several tries before you get one!  CASH is one of the best ways to purchase "bank owned" properties today, followed by CONV, then VA then FHA!  The more the bank nets on the deal the more likely they will accept that offer!   FHA guidelines are the most pro consumer where the banks have to do everything to fix up the properties prior to receiving FHA funding...that's why FHA borrowers that need help with closing costs will never get some of the deals out there!  Generally CASH buyers fix up the property after purchasing it...new carpets, kitchen cabinets, granite counters and remodeled bathrooms and sod will give the home lots of curb appeal...they wait 91 days before flipping their acquisition to a qualified FHA buyer.
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July 14 2009
"What have you got to lose ?"

how about  TIME ?
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July 12 2009
Listing agents are required to present all offers.  From my experience make the offer if you like the property.  What have you got to lose ?
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July 12 2009


don't waste your time with  short sales or foreclosures if your agent isn't very well versed in them. Spend the time to find an agent who is specializing in them and talk to them about your options.  Get pre-approved ( not prequalified), locate a title company, and give them a check for approximately 10% of the price range of houses you are looking at for escrow.  If you are searching in a hot area, Don't put too much weight on the asking price but do your homework and know exactly what the home should sell for   don't rely solely on a CMA for this. Look that the number of additional homes pending foreclosure, dates of trustee sales, and keep an eye on pending listings in the area you are looking at.   If you are looking at the home to live in you will want to watch the buy vs rent equation. Obviously you want to buy at or below the rent price but if there are a lot of foreclosures / short sales etc and they are selling at approx price=rent I would be concerned about the number of renters that may likely be moving in.   In order to get the great deals you can rely on getting lucky or you can take it upon yourself to know exactly what a specific home should sell for so when you see a deal you will know to go after it. 
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July 12 2009
Edtilton,  

Try a foreclosure -- Short Sales are a tough bidding war. Hud properties can be a bidding war too -- Good Luck --There are plenty of great buys
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July 12 2009
Profile picture for edtilton
I seem to be in the same position with cash looking for an honest bargain. The "Short Sales" are just a scam to get you into a bidding war and the HUD listings are wrecks. Trying to find an honest bargain with cash in hand seems to be a lost cause
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July 12 2009
A great cash offer is looked upon most favorably!
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July 12 2009
Look at this from an asset managers point of view.  They are possibly  sitting in a cubicle over 1000 miles away.  It is their job to move these files across their desk as effeciently as possible not make every dime on each deal.  They dont want to see the file again. so if it were you and your job depended on how many files you moved on a monthly basis  would you take the pre-approved buyer that was 5% higher and possibly have the home not appraise and they cant afford to come up with the difference or have them lose their job mid contract and walk or have interest rates change or their be a glitch in financing which holds the deal up  and inherit the file back ?   or would you take the as-is, no inspection no appraisal quick close cash offer ?   I'm not saying they dont take the high bid because obviously they do  but in multiple offer scenarios your odds of the bank accepting a financing offer vs a cash offer if they are with in a few %  is not great.  

From personal experience.
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July 10 2009
The selling price is irrelevant to you. You want to know market value and pay much less for a foreclosure. If you will be offering all cash you should be in a great leverage position. Will you be doing sweat equity? If not you could be all cash in a house that needs repairs and no cash to complete them. Always get a home inspection and insurance quote in your grace period. Best of luck to you!
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July 09 2009
Profile picture for hardcandy22

Yes, if you are attempting to buy in a good area or a "hot" area than you are probably going to have some competition. If the list price is below market value then expect multiple bids to be submitted.

I speak from expieriece! If you offer a short close,cash,and a decent earnest deposit you will rise above all offers.

I put an offer in with such terms and my offer was accepted out of 18 other offers all higher than mine.

On another REO in a very nice beach community again my offer was accepted and then again in another very prestigous area where REO's dont stay on the market longer than three days.So if you are competing in hot spot cash is king and cash will get you the property you want above someone else.

Offering cash does not mean you have to wave any rights as someone said below and it is not risky! variable loans are risky. Taking out a mortgage you cant afford is risky. Since when is paying something in full risky? If you want a fast close simply have your inspections done in 7 -10 days .

Now, should you spend every last dime you have, no. I'm guessing though that if you have saved that much you would leave yourself with some savings.




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July 09 2009
Simply write the best offer! The bank wants the best overall terms. Not just a type of financing or payment.  They want to know you will close and meet the terms in the offer. Make sure the Agent you hire can do the research and write a great offer.
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July 09 2009
I still disagree.
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July 09 2009
No cash is not always king...many foreclosed properties are owned by lenders who used  government loan underwriting and they have a obligation to seek owner occupants before investors.  The majority of cash sales are to investors...who choose from properties that were not sold to homeowners because they could not meet the underwriting standards (needing repair or major renovation).
Even in the case of an REO property that has no owner ocupancy restriction, with interest rates so low, you may be better served by keeping your liquidity for upgrades or other investment opportunities. Cash can be "fast" but also risky - many cash sales also include waiving rights to inspect and are suitable only for the deep-pocketed indvidual. 


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July 08 2009

 "All  houses sell for "cash", right?  Because the loan you take is paid out to the seller in cash...so it doesn't always make much difference to the seller what the terms are."

lol .... ummmm   nope.   An asset manager looks at what gets it off their desk the fastest which isnt always the highest price. An actual cash offer will often take priority over an approved financing offer for several reasons. the short list is.

1.  cash offers will usually close faster. 

2. no appraisals to worry about to find out later that the buyer cant get financed for the amount offered.

3. no possibility of financing falling through.
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July 08 2009
Where is "down south"?  I just closed an all-cash deal for a client - in the Southern California desert. It was way under the neighbor's values and it was under the bank's asking price. Sad to say - but they were more responsive than many "normal" transactions where the agent or the sellers were difficult to deal with!.  We closed in 30 days - and it could have been sooner but for my buyer's arrangements.

All-cash offers are king if you want to close quickly.  In some markets you can turn around and put a mortgage on the home once you own it.
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July 08 2009
This is a really old post.


Cash is always the best way to get the lowest price when dealing with a bank. Offer to close within 24 hours and see if they will make it happen.
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July 08 2009
Rule is..If the interest rate you get is less than what you can invest the money for elsewhere use the banks money and invest yours elsewhere.. Rather than pay cash you can invest the same amt and buy 5 houses by putting 20% dp on each house (investment homes usually require this amt now). Thats the way to use leverage . At 20% down the rental income should at least make you have a small positive cash flow, and it increases as time moves forward and rents increase. At the end of the mgte term you will have 5 houses instead of 1 and will have had the same initial outlay of cash.
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July 07 2009
All  houses sell for "cash", right?  Because the loan you take is paid out to the seller in cash...so it doesn't always make much difference to the seller what the terms are...more important is your ability to close on time and accept the "as-is" condition of the property and a "special warranty deed" at a price that is supported by local market conditions.  There is risk in all investing and real property has ongoing costs and risks that you should be well-informed about before you proceed. 

It is typical to offer less than the offering price to open negotiations...I strongly advise that you get an experienced realtor to help you. The seller pays commission to the buyer's agent so it won't cost you to get some help!
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July 07 2009
Cash is king, as they say it. I've gotten some really good deals for my cash clients by outbidding other buyers with our cash offer.
Sometimes sales price is not the only criteria the bank is considering. Fast settlement, absence of standard contract contingencies, etc are also part of the sales contract value and seem very appealing to a seller.

Go ahead with your cash offer but stay firm on your price. Banks should get responsive when they see cash offer - normally it takes a while to start getting direct feedback from a bank. If any questions, feel free to post them here and we'll be glad to help you out with advice. And as it was said already: do consult a realtor! Especially with such an important investment decision as cash purchase.

~ Snezhana Conway
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July 07 2009
It is all in the numbers. In the Sacramento, CA market you can pick up income properties under $150,000. Yes. A house in a major metro in CA for $150,000 or less! However, the glut of bank owned homes has passed and only represent 10% of the market. 50% is short sales and the remainder are regular. Consult a local agent to get the real story. The press is 2-4 months behind and each market is different.
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July 07 2009
Yes, if you have the cash to spare. There are some great deals in Charlotte, NC right now. Don't forget to consult a Realtor!


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July 06 2009

Don't wait with unemployment rises many people are down sizing-- If you are buying to make it an affordable rental or nice starter home. Properties under 150K are selling  pretty quickly and are receiving mutliple offers. -- Bring your best offer from the start. -- IF you can finnance it --Do it -- Keep your cash for repairs--   You can low ball but don't go so low that you are offensive -- Remember the bank can always auction the property off.

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April 12 2009
YES. There are plenty of steals. But make sure you buy the right property that will hold its value, be rentable, or be able to be put back on the market for a profit.
There are plenty of ways to lose your investment. And buying the wrong property is an easy way to do it.
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January 05 2009
I believe most Bank REOs are priced well below market value, and they expect 90-105% of asking price.  Sometimes they lower asking price after an offer.
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December 25 2008
you may get a great deal when you have cash, make sure you are buying something that you can rent so this way you can get some return on your money. also you need to learn to look into a ratio that is called Cash on Cash, this ratio tells you the return on your cash investment and it will allow you to evaluate things accuratley. here is an example: if you buy something for 90K and pay cash you also pay an addional 10K for fix up and upgrades then your total cash investment is 100K if you make $900 rent a month then you would make  $10800 in total after one year, you need to take out some money for cost like taxes and upkeep so lets say that you would pay $2800 a year then your total income is 11800-2800= $8000 your cash on cash is 8000/100000 *100 = 8% "This is much better than what you will get from a CD at 5% a year. and that is way buing Real Estate with Cash is good thing to do. make sure that you work with the right agent who will be able to advice you on the right property for you. thanks.
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December 19 2008
Profile picture for AGCGartner
Out of all the R.E. investment seminars I have attended, the motto has always been "use other peoples money." So if you can get a morgage, you can keep your cash for not only emergencies but in case you need to fix up the place. Also you could use cash for investments in "hard money loans" stocks and bonds for example. Cash is king in hard economic times. Make sure yours is freed up.
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December 19 2008
Depending on the area of the country you are in this winter could be the lowest prices you will see.  I would say its a great time to come in with cash and offer significantly lower then the banks are asking.  
With loan money hard to get the banks are even more desperate to unload their inventory before they have to report the 4th quarter numbers.  Why not take your cash and buy a couple of small places?

Make sure you check rents in the are via the newspaper or driving through.  Pay for a management company, it is well worth it, unless you are very handy and can easily kick out a single mother with three kids and no place to go.

I'm calling this winter the low point where I live.
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December 19 2008
Profile picture for BuyEqualsRent
In general, I would say to wait for a bit longer.  With unemployment rising, housing prices are going to keep coming down at least for 2009.  In the long run, you definitely want to buy at some point in this cycle because the government is doing everything it can to destroy the dollar.  But when you do buy, you might want to think about not paying all cash.  If you take out a loan at today's low rates for 30 years and then inflation goes way up, which is almost certain to happen, then you'll get to pay down your loan with cheaper future dollars.  Invest the money in a diversified set of funds and ETFs in things like oil and commodities, with some in an S&P index fund.  These should easily beat out the 5% or so you'll be paying on your mortgage.
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December 19 2008
 
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