Cash Buyers and Why You Need Them

Cash Buyers in Real Estate

Have you heard the saying that "Cash is King"? Well, I'm sure you know that saying is true in almost every senerio. Think about it a little deeper. How is this true in today’s world? After all, most people don’t even carry around cash anymore. Most people just use credit to buy things with less of an upfront cost. That equates to bartering for a better deal because you can take it home right away and pay on it later. Money is money, so how is having cash any better than a line of credit or a bank note?

If you have performed any sort of real estate transaction in the past, you may have had to ask for financing from the bank, credit union, or mortgage company. These companies all require forms and information from you. It was probably a fairly extensive process. You had to complete forms about your current living situation, your debt to income ratio, your income, and what may have felt like your entire life history.

This is all to give those lending you the money some reassurances that you can and will pay back the money you are borrowing. It is not a guarantee but it gives you a rating of sorts. The higher the positive rating, the more money with lower interest the banks will likely give to you. If you have a lower score, you may not qualify for the larger amounts of money. It is similar to applying for a credit card. The better your credit score, the higher your limit.

When buyers find a house they love, the process then begins. Sometimes buyers will be pre-qualified, but with today’s standards getting stricter, it has become increasingly difficult to secure funding for even an average house with no major necessary repairs.

Many buyers are forced to wait until they find a property they like and then apply for funding. From the start of the application to the end, it can take several months. If there are problems with the person’s credit, they may need extensive underwriting. What that means is that the buyer has to explain the problems in their credit history and do things such as provide documentation that the bill was paid, though paid late.

The company providing the funding may give it the go-ahead within a month and then come back with a red flag item the next week. This can all create a huge hassle for those involved with this particular real estate transaction. Not only can this hold up the purchase but it can even cause the seller to cancel the offer and move on to another potential buyer.

Cash Buyers are Better

The same is true when you have a house that needs renovations. The situation can be even more taxing as the banks will rarely lend money to those who want to buy a fixer-upper unless they also have some way to fix it up. It is only natural for the bank to want to make a sound investment. Put yourself in their shoes. Would you want to invest in a property, sometimes states away, that needs a lot of repairs without the buyer having the necessary funding in hand to make the repair? What if the buyer never could make the repairs or only make some of them and you were left with a half-finished house? This is how the lending companies assess the situations and make their decisions.

While their reasoning is logical, it doesn’t make it easy when you want to buy a cheap house and fix it up. Many people have done this type of real estate deal and it has earned the name "flipping" as the house is bought for a cheap price, fixed up, then sold, or flipped, for a profit. It is a common real estate practice but one that can be difficult if you don’t have the funds necessary to make the repairs and make the property one that people will quickly buy.

A cash buyer is one of the best types of real estate buyers. If you’re wondering why, think about the hassle banks and lending companies create with their paperwork, strict standards, and underwriting that has to be done on each loan. Sometimes this is just too much and the seller will not wait until it is approved but will move on to the next buyer. When cash is present, the scenario changes greatly.

Cash ensures you are not waiting on funding. Not only will a buyer with cash be able to close the deal quickly and effectively but they have more negotiating power with the seller. A cash buyer can avoid the closing concessions and offer a lower price which the seller will usually take because it means the house is actually sold and not in limbo. For many reasons a cash buyer has more leverage and can work the deal with the upper hand. A cash buyer is the one you want for your transactions. When cash is on the table, deals will be more likely to close and parties will be able to move on quickly.

Finding cash buyers can be difficult but not impossible. If you know how to look at county records you can sometimes find out who paid for what and how. You can also just keep your ears open. People talk about the financing that was done on a real estate deal if you know where to listen and look. These cash buyers are the ones who are looking for a great deal and have liquid assets. They have cash in the bank and want to invest it.

There is also an easier way. I’ve created a cash buyer data feed like you’ve never seen before. Below is a link to check it out.

==> Cash Buyer Data Feed

By using a cash buyer, you can avoid all the red-tape and hassle that comes with traditional financing. Your deal will close faster and easier with a cash buyer. Most of the time, they are eager to pay and complete the transaction, which makes it a favorable situation for all those involved. So the next time you have a cash buyer and a lowered price, go for it! They can create almost a perfect transaction.