Author Topic: What is considered a cash offer (housing)  (Read 2016 times)

ImCheap

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What is considered a cash offer (housing)
« on: March 30, 2017, 08:17:42 AM »
When looking to purchase a home what could be considered a cash offer?

$150K liquid today, rest of the cash is in differed accounts and other not so liquid investments.
Own current home outright, lets say its worth $250k, will sell after we buy the next home.
Would need to borrow $100k-$150k for the new home until the old one sells.

Two housing options:
1: Buy a new place that's close to turn key done for $300k ish.
2: Buy a pile a dung that needs work for $200k ish, + $50K-$75K ish for rehab. (preferred option).

If I make a offer on a home would it be considered a cash offer if I have to take a mortgage out, suppose a HELOK could be an option too?

Rest of the story:

I don't have enough liquid cash to buy the new place but I don't need to sell the current home really either. I don't have an issue borrowing some dollars for a half a year if need be until the other place sells. If we buy a turn key place with any luck the old place will sell quickly. If we can find a pile of dung that needs everything I plan on it taking 3 months give or take to rehab it, I hate living in a place while doing a major addition/rehab. We do enjoy rehabbing a home to the way we want it so with any luck that's the way it will go.

We can stay in the current home but life is short and want a few things that would be tough to add to current home, in all likely hood this will be our last single family home until we become plant food.






seattlecyclone

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Re: What is considered a cash offer (housing)
« Reply #1 on: March 30, 2017, 08:41:47 AM »
Here in the Seattle market where inventory is super tight and multiple offers are going in for most properties, you're unlikely to get much of anything with a financing contingency in place. Everyone waives it, but we're not calling everyone's offer a "cash offer." We call it a "cash offer" when the buyer has liquid funds available to close the deal in a week or less without going through the typical mortgage approval timelines. That would set you apart from someone else who waived the financing contingency but still needs a loan, because the cash offer will put in a much sooner closing date.

rantk81

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Re: What is considered a cash offer (housing)
« Reply #2 on: March 30, 2017, 08:48:45 AM »
During the housing crash, I bought a foreclosed bank-owned condo with a "cash offer"... The selling bank was happy enough that I showed them a screenshot of a HELOC I had on my primary residence with an available draw amount over the price of the condo.


Capt j-rod

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Re: What is considered a cash offer (housing)
« Reply #3 on: March 30, 2017, 09:01:28 AM »
A cash offer is a certified cashier's bank check for the sale amount. If you can get to the seller before it hits the realtors, you have some awesome leverage. I just sold a property for $89,000 via realtor.... There was $12,000 in commissions fees, and BS. It is rental property so it will all write off. That being said, had the buyer caught me prior to the agents, I could have sold him the property for $77,000. There is a TON of BS in real estate. They all make a living off of creating fear in these transactions. Cash is powerful in the right transaction.

tralfamadorian

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Re: What is considered a cash offer (housing)
« Reply #4 on: March 30, 2017, 09:17:08 AM »
What is considered cash depends on the buyer.  In most situations cash = waiving the financing contingency.  As long as you close on time, the sellers don't care if the funds came from a brokerage account, a HELOC, HML/PML or traditional financing.

However, there are exceptions: 
-In some obscenely tight markets sellers will ask for POF before accepting a cash offer and will only accept proof of cash- no stocks, no undrawn HELOC. 
-The real estate contracts in some states distinguish between waiving a financing contingency and source of funds, which can put your earnest money at risk if the sellers find out that your "cash" offer is something other than cash. 
-Not personal experience but I've heard that HUD will cancel closing and take your earnest money if you try to slip in financing at closing. 

ImCheap

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Re: What is considered a cash offer (housing)
« Reply #5 on: March 30, 2017, 10:18:58 AM »
Thanks all and some comments, this house will not make us house poor. I would just rather not sell a pile of stock and pay the taxes on those funds.

I like the idea of a screen shot of a HELOK in place, that may work. Maybe a preapproval would work too. We both have credit scores north of 800, no debt and good salaries so I don't an issue. Maybe we should hold our cash and borrow it all:) Have not had a mortgage payment in something like 8 years now, not sure  I could make one again!

I think best definition was a Cash Deal = no financing.

I do think being we don't need to sell the current place an have 50% down we are in a decent position to buy. If we can find a place for $160K-170K I could pull that cash together, that would be the best for us!

Reynold

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Re: What is considered a cash offer (housing)
« Reply #6 on: March 30, 2017, 02:30:46 PM »
Definitely having a really large down payment, like 50%, helps set you apart from someone who is putting down 5 or 10% and hoping for a loan.  In our case, we were buying a place near the bottom of the downturn, and paying a bit more than otherwise because we were already renting it and we wouldn't have to spend time and money moving again, so the appraisal came in a bit lower than we had settled on for the purchase.  Still got the loan because it was for such a small amount relative to the total equity.   I have definitely seen real estate agents on both sides of our transactions recommend particular purchasers because they weren't dependent on iffy bank financing. 

That said, DW and I play our cards pretty close to the vest even with an agent working for us, especially on a purchase, we don't want any hints leaking through that we COULD pay more but choose not to.