Cash is King

The investors are BAAAAAACK!!!

Most investors must wait for the credit crunch to end however, those with cash on-hand can capitalize on the Hottest Buyers Market that America has seen since 2003.

Cash offers allow an investor to have the upper hand in negotiations and aid in winning the offer war on properties.

Cash is King because agents inform their sellers on just how poorly the lending environment is.

Working with an all-cash buyer, the seller is assured that sufficient funds will be available.

Other incentives for all-cash buyers:

A typical closing for a buyer who requires financing is 30 to 45 days for a residential property. If an all-cash buyer is ready to sign and write a check for the full amount, the seller need not worry about appraisal or loan funding contingencies, which can be tedious and often cause a promising sale to fizzle. This is especially true of loan funding contingencies, as pre-qualified buyers may still be denied their loans if their financial situation or employment status changes or was incorrectly reported. Appraisal contingencies are also risky in such a volatile market. A property may not appraise for the actual purchase price, leading a lender to ask for more money down from the buyer or a discounted rate that reflects the appraisal price from the seller. Eliminating these contingencies expedites a property’s closing, which can happen in as little as 2 weeks with an all-cash buyer.

Cash Buyers are serious.

When it comes to bank-owned properties, this can be essential. Being an all-cash buyer is one sign that puts a bank’s mind to rest because it knows the buyer has the means to purchase the property. For this reason alone, many bank-owned listings will specify “cash buyers only.”

Cash purchases are much easier for sellers

Though one may argue that having the cash on hand is not the same as actually handing that cash over, it is a step in the right direction that makes a seller confident the deal will close. Cash cannot be overemphasized.

An Agent only enters into a negotiation with a buyer because he or she believes that it will result in a closing. Until escrow has closed and the check has cleared, however, that deal has a million different ways of falling apart
(50+ folks are employed during the escrow process).

A failed escrow can result in lawsuits, hefty fees and, in some cases, a seller that becomes so disenfranchised with the sales process and so distrustful of buyers that the property is pulled off the market. In order to avoid the headaches, stalled plans and a losses from property devaluation, many sellers will readily accept a lower offer from an all-cash buyer over a generous bid that would require financing.

Cash buyers are clearly primed to take advantage of the down market, which should last throughout most of 2009 and probably 2010.

Limitations:

A growing trend in Central Florida are Investors who traditionally invested in stocks and bonds are pulling their money out in favor of a more stable, long-term investment vehicle like Central Florida real estate. This is increasing the competition for the best valued properties … resulting in multiple offer situations - reminding me of 2004-2005!

Another limitation are The Sellers.  Many sellers aren’t willing to accept that realistic asking prices today are significantly lower than the inflated prices of years past.

Instead of accepting the lower prices that both the market and, traditionally, all-cash buyers demand, sellers who aren’t in a bind are simply pulling their properties off the market or standing firm in their asking prices, even if it means that the properties won’t sell for two or three years.

Allow the Lee Rosa Team to evaluate the current marketplace with your investor status.  Set up a F-R-E-E consultation today.

407.227.9182 or Lee@LeeRosa.com