Thread: questions on buying a home with cash for a newbie!

My wife and i are looking for houses/townhomes and we have decided we are gonna pay cash. can some of you please tell us all our negotiating advantages since no books ive read or have seem cover a cash purchase.

lets say a home is listed for 170,000 and the fair market value is 160,000 would my max to pay on that home because im a cash buyer of 3 to 5% below fmv be considered low balling?

take into consideration theres about 50 to 100 houses for sale similar to one another in a 20 mile radius and most have been on the market several months.

also can you tell me the advantages of the seller dealing with a cash buyer even when the cash buyer wants the house a bit lower than fair market value?

can you tell me what closing costs would be for a cash buyer besides home inspection?

also does a new construction townhome developer look at a cash buyer in any different light then a buyer needing a lender.Is there any hope of getting a better list price on a new townhome or are they set in stone.
if theres a way can you tell me how to go about negotiating that one?
take into consideration my agent works for the developer!

also im looking in both upstate new york and the lancaster pa area shoul i tell my agent on the first day im also gonna be looking in another state, what advantages /disadvantages would there wbe of telling them or not?


thanks
zim

Others may have a different opinion (and I'd be interested in hearing them), but being a cash buyer may not be a huge deal to many sellers.

The real benefit is time and security. They don't have to wait for a buyer to secure financing, and they don't have to worry about a mortgage contingency - or that the deal will fall through b/c of financing.

It's still relatively easy for buyers to find affordable financing, and most sellers aren't looking to move within days/weeks.

You're more likely to get a discount b/c of competition, recent prices, DOM, etc.

On a side note, I'm sure you have your reasons, but why pay cash when it's still relatively easy to get a return higher than your interest rate?

bad credit! plus im self emplyed!
3 yrs ago i got 1 place to even consider me out of about 20 and it was like 10%

not to try to be a financial advisor or anything but once you get your new home with cash, you may consider a small cash-out loan

while the rate may be a little higher than what you'd find on a 30 year fixed, the payments could help you restore a solid credit history

just a thought

On the other hand, if you can afford to pay cash for the most expensive item most people will ever buy, who cares about your credit? Keep it bad, you'll be at a lower risk of identity theft and you probably don't get so many credit card junk mail offers every day!

As was mentioned before, there are not a lot of negotiating advantages with going straight cash. You will still have a closing and instead of a loan officer handing them a check it will be you.

EDIT - please don't assume the above is financial advice.

There is not exact formula in making an offer on a property. Do your homework on the past sales, past appreciation, community, neighborhood, schools, and shopping. Once you do your research, come up with an offer that you feel that will work for you. If he is sellign for $170K and you have done your homework and feel that it is only worth $145K to you, then offer that. You never know what the seller's motivation might be. He might need to sell right away to avoid foreclosure or just wants out. You never know what kind of deal you can get, until you try.

I'd rather use the money as leverage and buy for or five properties

That would be a good idea, but in his case he doesn't have the credit to get approved to buy that many. He could find a partner that could get approved, that would be an option.

Not sure.
I think he could do it with 20% down no doc...

If I were you, I will go for a financial advisor. He would give some good recommendation for you.
There are good calculators in this site mtgprofessor dot com . Check the cash vs mortage calulator. Even if you have a bad credit still there are lot of ways to improve it. In states, to say money in mortages or credit card or car loan etc you need to have a good credit scores.
Another option to get a loan is consult upfront mortgage brokers. They are honest in their fees and disclose them before you start working with them.