Do cash buyers have leverage when purchasing a house


bjbjs Do cash buyers have leverage when purchasing
a house Hello. Welcome to Todd Miller TV. I got another question from Ask the Expert
so I m going to answer this one with a video as well. This actually came from the same
person who asked another question. But so I m going to answer with the video because
I know a lot of you have the same question. And the question is do cash buyers have more
leverage than a financing buyer? And the answer is yes, but maybe not for the reasons some
people think. So, when a person gets a loan on house, the seller, they close escrow on
it. The seller actually gets whatever the amount was. So let s say that they own a house
free and clear and it s a $200,000 house. And you have two then you have a person that
goes and gets a loan. They borrow $200,000. And when that person get closed, it s close
of escrow, they get their $200,000 minus whatever cost there were to sell the house, commission,
et cetera. They actually get all the money. There are people out there that think and
I don t know where they get this from, that if the other person gets a loan, they don
t get all the money, they get payments every month. OK? That s called seller that s when
the seller is financing the house to you but if they go get a bank loan, the seller gets
paid. I actually have people call me and say, Hey, why you take my cash offer because you
ll get cash. If you take that financing offer, you re just going to get payments forever
and you don t want that. And I m like, No, I m going to get cash at closing. Just because
they re getting a loan, that s a loan that s coming in to title. All that money will
be there. So it s the bank getting the payments not the seller. That s what seller financing.
So it s a little misconception but believe I mean there are people out there that believe
that for sure. But as far as leverage, yes and no, and this is why. If a person is going
to get a 150 grand for the house and you have a 130 or 140 cash offer, well yes, you may
close in two weeks but if that other if that loan is going to take a month or 45 days,
here s the question, would you wait another 15 or 30 days to get 10,000 more in cash?
Would you get 10 grand? Would you wait? So, you don t have that much leverage. I mean
it s not like and I see this all the time, we ll get an offer under contract with cash
buyer. We ll find out after it close that someone got a loan and they ll freak out and
call us going, I can t believe you turned down our cash offer. We offered cash. That
was cash. We could close in two weeks. And we ll say, Yeah, but the other people offered
more. Yeah, but And they ll reiterate, But we were cash. This is cash. Well, whatever.
I mean just because a buyer has cash doesn t mean the seller needs to take a discount.
Now, where it s going to matter is if you have equal offers. You have an offer for 150
financing. You have an offer for 150 cash. Now, you have leverage. That s your leverage.
You don t have leverage because I mean you re not always going to get accepted just because
you have cash. That doesn s a myth out there. Here s the other thing. In Vegas, over half
of our properties for cash offers anyway. So everyone has the same leverage. So you
don t really have that much leverage. Only if people if it s overpriced and it s not
going to appraise like if the house is only worth 150 and you have offers for 160, 170,
180 financing and you re saying there s no way those will ever happen and then somebody
offers 160 cash even though it s the lowest of all the offers, a seller might accept that
because they might say, Well, none of these offers other offers are going to get accepted
because they re too much. They ll never appraise. I ll just take the 160 cash because that s
probably the best overall deal. But that s only if they can they couldn t get the 180.
Meaning if the 180 or 170 or whatever wouldn t actually happen, if they didn t believe
it would happen. So there is a little leverage in cash. Not as much as most people think.
It s certainly the people who are lowball in cash and I just I have a lowball cash offer
in front of me on the desk with a house I have, six offers now on and it s through the
worse [0:04:13] [Phonetic] and they re not even going to look at it. So anyway, thought
I d share that with you. That is my update and hope to see you on another video. Thanks.
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22 comments on “Do cash buyers have leverage when purchasing a house

  1. what if the buyer is saying money is not an  issue if the house cost is 2 or 3 mil worth  or more he will buy it in cash

  2. Of course they do. I just paid cash for a $800,000 home that I saved up for on $130,000 salary. Only took me 61/2 years. This is the home I will die in. No need to sell

  3. He really didn't mention too much about why someone would sell to a buyer getting financing. The bottom line is if you can significantly profit more, even if you have to wait longer and jump through a few hoops, before you get paid then it will be worth it to sell to a financed buyer. The main benefit of a cash buyer is that you can generally close quicker. It really depends on your situational needs and goals.

  4. you turned 1 minute video into nearly 5 minutes. I buy house by cash and its easy. what I explain to seller is if someone offer 15k over my offer but have to wait on bank, I say ok and walk away. no loan is guaranty even with fair to good credit due to housing value differ daily in some cases. I had people return to me and actually take 30k then my previous offer due to someones loan not approving. hey whatever, right. more money in my pocket is a good thing.

  5. What if the property is long distance for both buyer and seller who are scheduled to meet in the future (like 2 to 3 weeks). Should a cash buyer try to 'gain' speed in leverage by requesting details for due diligence before the meeting somehow? Is this a possibility? Will that help?

  6. Wait till bank financing sours, and cash is King. Rates are climbing, significant cash discounts will be here in no time.

  7. There is a big leverage with cash buyers. Just think about it. Why would the seller prefer a buyer that borrows from the bank and wait 30-45 days to close escrow and risk not getting financed at all. There are so many reasons for a borrower not getting finance at all during escrow.

  8. Cash offer works all the time…he doesn't know
    A home selling for 250,000 and you offer 200,000 CASH OFFER
    Hell yeah hes going to sell it to the cash offer.

  9. Cash is better. People that get mortgages are a headache. They put minimum down on a house and then you have to wait a month for a million people to look at the property, all while its the hot season of the Realestate market. Cash is king

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