Advantage of buying a home with Cash in Today's Sellers Market

Dated: 10/22/2018

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If you are buying a home with Cash in the Tampa Bay Area, you may be able to buy that home at a large discount, move in sooner than the typical escrow time. (15 days Escrow Period)

Some home sellers won’t care if you are using cash or financing their Tampa Bay real estate.

Cash can be King to some home sellers and all home buyers

Whatever your reason is that you don’t want to bother with financing real estate, cash money will put you in a financial position to leverage negotiations..

This is often referred to as the “Cash Price”, and used in the following sentence, “What would be the cash price for that home?”

Remember, when all is said and done, the cash is going to go through most of the same channels as if a real estate transaction had been financed.

When financing a home, some buyers finance because they NEED to write off the mortgage interest, if you are financing – a CPA can show you how to write off the mortgage interest  Tax Benefit.

It will take finesse and it will take us being able to provide for the home sellers real numbers and advantages of accepting such an offer via the homeowners real estate agent.

If you want to buy real estate, and if you are going to need to get a loan to do so, your Lender is going to have an appraisal completed on the home they are financing.

The appraisal will be working for your lender to the home is worth what they are lending on it. You will just be paying for that service.

The Lenders appraiser typically meets with the listing agent, The listing agents used to talk a lot to the appraisers. Since the last fall of the real estate cycle back in 2006/2007, we don’t speak with the appraisers much due to HVCC

However, at the end of the day, their appraisal report is going to be scrutinized by many different parties to the real estate transaction on the financing side.

The appraisal report is also able to be viewed by the home buyer, their real estate agent and their lender and lender’s staff.

The Homeowner and the Home Owners agent is not allowed to see the appraisal report without written permission. The only piece of information they are privy to is if the home appraised for the amount which was agreed upon.

The reason, as an aside, is if the home appraises for higher than the agreed upon price, some sellers retract and will not continue to preform as outlined in the contract. Some feel as if they were misled and as if they gave away their home at a discount which they did not agree to. 

If you are buying a home with cash in the Great Tampa Bay area, you don’t have a loan that is going to need to have an appraisal done, that's something the seller won’t have to worry about.

Does that mean that you don’t hire an appraiser on your own? Of course not. You can hire as many inspectors as you desire to check all parts of the home.

The same applies to the appraiser when you are buying a home with cash, you're hiring them to make sure you're not overpaying for the home.

It’s your choice as to whether you want to hire an appraiser and if you want to have that necessarily impact the transaction. You can make the home contingent on having the home appraise for the amount you agreed to pay. As would be the case with a person who was buying a home with a loan being necessary. As a Cash Buyer, you can also have your purchase of the home not be dependent on the home appraising for the amount you agreed to pay for it.

It’s up to you and will definitely be property specific. If I can wrangle up comparables that satisfy myself and my cash buyer as to what the value of the home truly is, then we should be good to go.

If the property is so unique that the custom Brazilian Mahogany wainscoting has to be counted by the square foot to obtain the value of the home, an appraiser would most likely need to be hired to give supportive evidence for the value and amount paid.

When representing cash buyers on homes in Safety Harbor or in the Greater Tampa Bay area, I would say we are about 50/50 on cash buyers wanting appraisers to appraise.

Costs of using a loan to buy a home versus cash

We are going to include Time as a cost. Time is money as they say, and as a cash buyer, you can appreciate that more than most.

Before I get into the “time” involved and how you save that when using cash to buy a home, I want to speak about “fees” associated with needing to have a loan involved.

The lender charges something called an “origination” fee to the home buyer that requires financing or a loan to buy real estate.

These fees can be absorbed by charging the home buyer a higher interest rate or they can be wrapped into the closing costs amount required to be paid by the home buyer. If that home buyer is able to have the home seller pay for their closing costs, or have them incorporate them into the price of the home, then all the better for them. Some home seller’s don’t want to do this because they are worried that the home may not appraise for the higher amount. Some home sellers can also reduce the amount of profit they will make with having the closing costs taken off of the amount paid for the home, not added to it.

Closing costs for a home buyer that is using cash to buy real estate are less for the escrow fee, the title fee and the lender fee is nonexistent.

Getting these numbers from escrow/title is important for a cash home buyer.

Time, as it relates to a home buyer using cash to buy real estate, equates to a faster closing. When buying real estate there is an inspection time frame. A time that the home buyer has to do all of their inspections on the home that is for sale. Home Inspection, Pool Inspection, Pest Inspection, Roof inspection, and more. Within the contract, it’s 17 days if that time has not been modified by mutual agreement by all parties. If the home buyer is getting a loan, there is a 21-day cap on the “loan approval” if the contract has not been modified and agreed upon by all parties.

Truth be told, there are times that when we are dealing with a cash home buyer we can have all the inspections completed in 7 days, then all that is left is negotiation and moving the money into escrow to close the transaction.

When a home buyer is using cash to buy a Pinellas or Hillsborough County home and, they have the ability to close quickly, much faster than the 45 days it can typically take with a financed home buyer. This makes a lot of sellers happy that are sitting on properties that they are trying to get sold.

Some home sellers don’t care if cash or financed

This is something where education is really important and having a home seller that is educated by their real estate agents is paramount.

All factors have to be looked at by these home sellers with their trusted advisors. Does it make sense to accept cash in their present circumstances?

Are they worried that their home won’t appraise for the amount it’s being offered for?

Are they living in the home now? Do they have to close this home before they can buy another? Are they going to be renting after they sell this home? Are they going to need their next home close concurrently(at the same time) as this one, making this sale contingent on their finding a home of choice?

Have the homeowners already moved out and bought another home where they are making payments on both residences?

How are the sellers financially? Do they have time to wait or do they really need to get their home sold because of the financial impact it currently poses?

Questions like these need to be poised and spoken about. Each senario is driven by motivation. Everyone involved n the transaction should know their options when it comes to negotiating the best deal for themselves.

When you are ready to buy a home in the Tampa Bay Area – Safety Harbor Fl or Pinellas County with cash or financing, I am here to help you naivgate the process. I have been representing buyers and sellers of real estate since 2001. Google Tampa Bay Real Estate Specialist, I'm positioned on Top of Google’s search engine. My real estate blog is made up of the best real estate content to help home buyers and sellers navigate today's real estate market.

Call me, I'm an experienced negotiator when it comes to buying or selling Tampa Bay real estate.

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Gary Ricco

Known as Ricco Sells Homes, Gary’s branded his passion for helping Buyers and Sellers achieve their Goals. As a Veteran and retired Police Officer he has been helping Military Families and 1st respo....

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