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Health & Fitness

Cash Is King???

But its cash!  I hear this all the time from buyers who are looking to undercut a seller's asking price.  Let me address this here.  The common misconception a buyer makes when offering to pay cash for a house is that the process works the same as when your buying a used car.  A car is parked along the side of the road, and you pull over to take a look.  The asking price is 5k.  The buyer then calls the seller and asks if he can take it for a test drive.  After driving the car, he then goes into used car salesmen mode(nothing wrong with used car salesmen, save the hate mail) and offers the seller 3500 in "Cold Hard Cash".  Sound familiar?

Real Estate doesn't work like that.  A seller really doesn't care that much that you're offering cash unless of course, you're offering his asking price.  Let me explain.  Cash gives you a little bit of leverage but not what most cash buyers are hoping for.  You see a seller generally is looking to get the most money out of the sale of his property as possible.  In a competitive market like this,  there are plenty of people looking to buy so why would a seller take an offer 20k less than the asking price when he can take an offer above asking price with a mortgage?  A full price prequalified offer is better than a below asking cash offer because at closing the seller is still getting cash.  Do you follow me?

A great example is a property I sold this past week in Mt Clemens.  The best offer was a conventional loan offer. Before we accepted I called the loan officer to talk with him about the buyer. He assured me that the buyer was completely qualified and that it wouldn't have any problems closing.  So why would we accept a cash offer less than the asking price?

Now let me be clear.  There are a few advantages to paying with cash.  For instance if your paying cash there usually isn't an appraisal.  Appraisal issues are very common so if a seller is offering full price cash, and another offer is over price financed the seller will more than likely take the cash.  On average in the area,  97.5% of the asking price is where homes are selling.  So if you're paying cash you can offer maybe 94-97% of asking to secure the property.  Another benefit to paying cash is you can close a cash sale in 7-10 days.  This can be an advantage over financed offers as well.
I know the saying "Cash is King"  is popular but at the end of the day the seller is getting cash anyways.  In a market as competitive as this, cash sales will definitely help you secure a home faster, but you're not going to be able to undercut the other five offers that are in line.  If you're looking to sell a home......buy a home......invest in real estate.....or start a career in real estate contact me today! 


Chris Taylor 
Keller Williams 
586.524.1095 
Chris.taylor@kw.com 
Www.christaylor.kwrealty.com

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