Answers (5)
- alochin
- Contributions:1
1. "cash-only" sales severely restrict the number of potential buyers. It is done because the seller has no choice: the house DOES NOT QUALIFY for financing. This is usually due to major repairs needed.
2. You don't need to have all the money in cash, but you do need to do your homework before making the offer. Go find an investment bank, and ask for an investment loan. Those run for about 12% APR, and require 25% cash available. The cash is not used, you may get 100% financing, but they want 25% cash available as colateral if the deal falls through. If the deal works, you keep the cash. It must be LIQUID assets, 401K does not qualify.
3. GET THE HOUSE INSPECTED before you make an offer. I know people that bought cash a house with no functioning electrical or heat. These could be very costly repairs.
4. If you buy the property, you must bring the property to code by fixing whatever was preventing the house to qualify for a loan. For one house, it was just a leaky roof (~10k to re-roof). Another had also a leaky roof, but on top of that, a rotten deck and missing kitchen appliances, these ran for about $25k. Both cases were still great deals.
5. Once the house is up to code, get a owner occupied mortgage (standard mortgage) at a low APR. This has to be done as soon as possible, to reduce the interests paid on the 12% investment loan. Alternately, you may sell the house without the "cash-only" restriction.
- Suzie Crudo, "Wholenewattitude"
- Contributions:251
Be very carful. Do NOT present a CASH offer with the hopes of getting loan prior to closing,,UNLESS they know you may use that option.
The lender will require more due diligence and some can be with the property condition,appraisal ,survey ,is chain of title clear...there is a lot of unknowns' about this home right now.
The lender will be stricter and they may not want to deal with a lenders objections.
Cash is always easier for ANY seller.
If you state cash,and cannot close due to lender denial...expect legal issues if they did not know you were trying for a loan and would DEFAULT to cash if need be.
If you are forced to result to your 401,you need to investigate that too..
you need your investment advisor or accountant for any penalties,tax ramifications..etc..You would also need to know how LONG it can take to luquidate IF you had to use that option.
MANY buyers have bought all different price homes for cash,there are buyers buying million dollar homes that way.
Everyone had different reasons,some for investment strategies,some for financial comfort and low monthly expenses.
It may mean this home and this situation is not for you.
Best of luck Suzie
- Craig Fialkowski GRI ,CDPE, "craigfial"
- Contributions:875
I work with investors that buy these properties. All signt unseen, no contingencies, all cash. We get great deals, and in many cases the occupants are willing to receive some money in order to vacate the property and leave it in good condition.
I would still knock on the door and stike up a conversation with the occupants to see if you can get some information. No harm in trying.
- Roxanne Govari, "Roxanne Govari"
- Contributions:118
- Michael Emery, "MikeEmery"
- Contributions:8076
Once you agree to a cash sale, you wouldn't be able to finance the property until after the sale. You can't arbitrarily change from cash to financing during the transaction without permission of the bank (owner) and clearly they are saying 'cash only'.
Plus if you do buy this property, getting the previous owners evicted would be YOUR problem. And there's nothing to prevent the previous owners from altering or damaging the property during the period where the inhabit the home.
REO property - Cash only sale
Have perfect credit and pre approval letter. Am I out of luck unless I can show proof of funds in bank / brokerage statement? How about a 401K statement but then get a convential loan prior to close? Would estimate price to be between $220,000 and $275,000. Who has this cash laying around for these types of sales? Are these cash only sales common with REO properties? This would be appear to be me no different than a sheriff sale based upon the comments from the bank? Any comments are appreciated. Thank you
Stating a discriminatory preference in an advertisement for housing is illegal. If you think this content is discriminatory or otherwise inappropriate and feel it should be removed from Zillow, please let us know by completing the information above.
We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.