There are so many novices in real estate today that only understand credit and financing. Forget that for a moment. Financing is harder to get these dasy becaus of rising unemployment, underemployment, and more scutinay from lenders that do not want to take on risk. However, there are still quite a few buyers with cash. Some of these are investors, and persons that feel the money is safer in something that is tangilble like real estate as oppsed to a soft assets in stocks, securities, bonds, and in the banks. So if you have not worked wiht a cash buyer, you need to get ready. Prepare your sellers, let them know that they are not going to offer you full price. You are now dealing with educated buyers that know the true value of properties. They will make a lower bid to test the market, however do not make the fatal mistake of rejecting the offer outright. Counter the cash buyer with a reasonable counter that shows you are willing to negotiate. Do not posture and counter back with a full price offer. It may be your only offer in this market.
Some caveats in dealing with a cash buyer? Yes, of course there are! They tend to be riskier deals if you do not understand the process, and do your homework! They love dealing with new agents, because they can manipulate them because of their lack of knowledge.
- Proof of buyers funds or accounts needs to be verifed ASAP! In writing, print and phone call.
- Use board standard contracts - never allow them the use their own contracts!
- All items must be in writing. Take no verbals on counters etc.
- Ask your broker to review the offer and terms with you and homeowner if necessary.
- Do not underestimate the cash buyer, they understand the deal better than you.
- In negotiations, don't concede too much too quickly. Cash buyers are the ultimate investor and will smell blood in the water and want more concessions.
- Focus on a quick close, but have the seller retain possession until the last possible moment. Never allow a pre-occupancy!
- Do not allow a substitution or assignment of contract. Next buyer will not be as qualified.
- Realize the buyer is not being guided by a real estate professional - most will choose to be unrepresented buyers.
- The secret to a cash deal is a quick close!
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Cash Buyers are great, especially in the current market .... the problem is they expect to get huge discounts because they're cash buyers.
I'm working with a client who has $1.6 Million cash to spend on a house .... but the homes he wants are all valued at $2.2 Million plus.