"But I'm a Cash Buyer!!!" Just because a buyer can write a check at closing doesn't mean that the seller is going to automatically drop the asking price to a wholesale price. Some other factor has to come into play for a property to go on the market at a wholesale price. The form of payment alone isn't enough to trigger a wholesale price. Cash buyers always WANT a wholesale price. The catch is that Cash Buyers don't always command a wholesale price.
Cash Buyers tend to believe that somehow they are automatically entitled to some kind of huge discount off the list price because they are paying cash. Not so. By the time a deal gets to the closing table, someone is going to push a pile of cash across the table to the Seller. The source of that cash just doesn't matter to the Seller. Most often, that pile of cash comes from the Buyer's Lender rather than the Buyer individually. 
In the average deal, the only thing that a Cash Buyer might have going for them is that paying cash eliminates any concerns the Seller may have about the lending process generally. At the risk of stating the extremely obvious, there are loans currently not closing where there is no obvious reason for them to fail to close. I had a lender refuse to lend to a Buyer with a 780 credit score, 20% down and an appraisal that was $5,000 MORE than contract price. That was a Big-Box National Brand-name Lender. I will never know what happened there. I couldn't get them to tell me what the problem was. They just refused to close. Trying to get an answer to that question, I ended up doing a Donald Duck Act in the lobby of that lender on a Friday afternoon at 4 p.m. in the heat of a Texas summer afternoon. In other words, it got ugly, very ugly. I got it closed with another lender, but it took almost two more months to get it done.
(Do you know the expression "once is an accident, twice a coincidence, three times is a pattern"? I may have just noticed a pattern...want to guess how many real estate stories over the last 3 years have ended with my saying "I got it closed with another lender, but it took almost two more months.....". There is a pattern here. But, that is another blog topic for another day...)
The reason a property may have a wholesale price tag on it has to do with condition and not how it is being paid for. A property that needs a new roof or major foundation work isn't going to pass the inspection of an appraiser. Lenders won't/can't lend under those circumstances. So, the only people who CAN buy are people with cash. Distressed properties have to be deeply discounted to compensate the buyer for the capital risk being taken and the work that will be done to bring the property back up to current market conditions (and, THERE is still another entire blog topic). The discount for distressed properties isn't because the buyer is paying cash but because the condition of the property warrants the discount.
__________________________________________
I work with owner occupants and investors both. Go take a look at my website or better yet, give me a call. My number is over there on the right, just below my be-u-tiful picture! If you are looking anywhere in The Metroplex, I'm ready to help you find the right deal...call me. Together we can get it done.
Comments(3)