When Cash isn't King!

Real Estate Agent with John Aaroe Group CalBRE 01274989

It used to be that cash was king; a cash buyer could jump to the front of a multiple offer line confident that his/her under-the-asking price offer would prevail.  Don't get me wrong, a cash buyer is always appealing to a seller because it usually means a quicker escrow and often no appraisal contingency, but from my experience, unless that cash buyer is offering very close to what a conventional buyer is offering, most sellers will go for a longer escrow period and the risk of a failed escrow with a conventional buyer, in return for a higher sales price.

How can a cash buyer prevail against conventional and other cash buyers?  If possible, your agent should contact the listing agent to fish around and ask questions:  have any other offers been received yet?  Are any of them all cash? Are any of the offers over the asking price?  How many over the asking price are all cash?  With this knowledge, you can write a good strong offer that has a chance of winning.  If there are already cash offers over the asking price on the table, your offer has to be strong: offer over the asking price, short inspection period, short escrow period, no appraisal contingency, no termite inspection, no home warranty, etc.  And never underestimate the power of a good love letter from the buyer, telling the seller how much the buyer loves the home, the neighborhood, etc!

We're in the midst of a real estate upswing, and in addition to foreign money investors, there are a lot of home grown cash buyers also including smart boomers with inherited money looking to invest in real estate, not the stock market.  Cash buyers are looking for a deal, but the real deal has to be viewed in retrospect; the house you didn't think was such a deal a year ago has increased year over year by more than 20% in some areas, and the same will be said in 2014 of the property you buy in 2013!  Don't miss out on every potential deal by not giving every offer your best shot!



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Nick T Pappas
Assoc. Broker/Broker ABR, CRS, SFR, e-Pro, @Homes Realty Group, @HomesBirmingham & Providence Property Mgmnt, LLC Hun... - Huntsville, AL
Madison & Huntsville Alabama Real Estate Resource

Hello Rose, I still believe that cash is king and it's proven over and over again in my area.  I also agree that talking to the agent about your clients offer and any other possible offers is not a bad idea...get all the info you can, but it has been my experience that you really have to listen to the other agent, tone of voice, fumbling, etc. and read between the lines because the answers you get aren't always reliable.

Sep 05, 2013 09:22 AM #1
Cindy Jones
Integrity Real Estate Group - Woodbridge, VA
Pentagon, Fort Belvoir & Quantico Real Estate News

The biggest reason my sellers consider cash is to avoid the appraisal trap.  However as you say unless it's competitive a seller isn't going to give there house away.

Sep 05, 2013 09:45 AM #2
Chuck Willman UtahHomes.me
Utah Homes - Alpine, UT
Utah Homes

I've not seen a cash buyer lose out except in the event that they :

a) the offer too low

b) expect too many concessions

c) offend the seller

Feb 11, 2015 08:41 AM #3
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Rose Osman

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