Everybody knows that "cash is king" and that cash buyers have an edge in the real estate market.
If you are planning on buying a home in Monmouth County in the coming months and you know you'll need to borrow money, does this mean you are at a disadvantage to the buyers who are currently paying cash?
Well, not if you know how to be a cash buyer with little or no money of your own!
Why is cash King?
Have you ever wondered why, they say that cash is king in real estate?
In order to understand this phenomenon, where a seller will take a lower price from one buyer than he could have received from another, you first have to consider the motives of most home sellers. What exactly do they want?
Home sellers are people who have their own unique set of circumstances that drive their motivation to sell a home. Sure, the majority of sellers prefer "more money" to "less money," however money is rarely the TOP motivating reason for a sale.
A cash buyer represents a stronger buyer to most sellers because there are fewer people involved who can "screw up the deal." When a seller says yes to a cash buyer, there isn't a lender that's going to kill the sale because of something the buyer did in the past. There isn't likely to be an appraiser who's going to appraise the property too low to make sure the bank is happy with it. Simply put, a buyer with cash is making a stronger offer than somebody who requires the approval of another.
How To Position Yourself to Become As Good As A Cash Buyer
So understanding the seller's motivation is the first step to getting the best deal when buying a home. We know that the home seller does not really care who's money comes to the closing table, the seller merely wants the strongest assurance that it will arrive on time, as agreed upon in the contract.
Buyers have tried in the past to include "pre-qualification" or "pre-approval" letters from lenders in order to reduce the concern about funds, these letters are not binding and thus are not valuable. Why? Because the buyer has yet to go through an underwriting process with a lender to determine their true capability to borrow the funds.
When a buyer goes to a mortgage provider and gets fully qualified for a loan, to include full underwriting, so that money would no longer be an issue that can provide the exact same benefit to a seller as the seller would receive from a cash buyer. Wouldn't that be great?
I have found a lender who will do just that. They will take you through a full loan application and put you in the exact same position as a cash buyer. Be able to close after going through your due-diligence, no need to wait for the loan application process, as it will already be completed!
This is a game changer in a very active market.
Doing this will make fast closings an option, so buyers who are financing their purchase will now be able to explore the entire market.
Distressed properties where banks just want out … no problem, let's close next week!
There are so many situations where being a cash buyer has benefits, and doing this brings those benefits to people who are willing to use a smarter home buying process.
Some Questions that may come up…
How long is this underwritten loan good for? from the time the credit report is run 4 months.
Why 4 months? By that time your bank statements, credit report ad pay stubs are out of date.
Can I update my bank statements, and pay stubs? Yes! and a new credit report has to be run.
Having said that you must make sure you do nothing to change your credit during this time for example do not close or open credit accounts, do not buy anything major items such as furniture. This will definitely alter your credit report.
Want to know more? Either fill the form out above or drop me a note and we'll get in touch with you right away.
Welcome to the world of being a cash buyer in real estate!
Gloria Benaroch is a 25 year veteran of real estate brokerage in the State of New Jersey She is a blogger with content that focuses on real estate, analytics, techie and provides her clients with a planned advantage in today's challenging market.