Buying real estate with cash should give you an advantage over other offers that may come in on the same property. However, weigh your offer and keep it as clean as possible. An abundance of contingencies, regardless of how the home is paid for, often puts a buyer at a disadvantage. Also consider the financial implications of a cash purchase –- losing any tax advantages and tying up available cash. If interest rates are favorable, you’ll also lose out on using the bank’s inexpensive money for your investment.
Speak with your real estate agent and ask her to discover whether other offers have been made on the property. If so, submit your all cash offer as part of the multiple-offer process, or as a back-up if a purchase contract has been agreed to. Verify that the seller has seen your offer by having them sign to that effect.
Find out of the seller has closing issues that may be helped by a fast-closing, all-cash offer. Allow the seller to stay on in the property if moving within a short time frame puts your offer at a disadvantage. Submit your offer with a statement indicating proof of funds in an American bank to reassure the seller that the monies are available for the purchase. Do not request a lengthy closing period as that alerts the sellers that outside-financing may ultimately be involved.
Make a good offer. Do not assume that an all cash offer will be greeted positively, especially if you low-ball the price. Remember that the seller gets cash at closing, regardless of how the buyer pays -– loan or all cash. Make the terms favorable to the seller in order to win in the transaction.
Keep your offer clean and simple. Do not negotiate special considerations on the merits of an all-cash deal, as the seller is more interested in the net result of the sale. By simplifying your offer, you can compete with assurance against a financed offer that offers a low down payment, a financing contingency, appraisal and inspection contingencies. Use the strength of a cash offer to your advantage in a short sale or foreclosure property.
Get an appraisal to substantiate the purchase price. Apply for delayed financing within 90 days of your purchase in order to take advantage of the mortgage tax benefits and to regain liquidity.
Jann Seal is published in magazines throughout the country and is noted for her design and decor articles and celebrity *in-home* interviews. An English degree from the University of Maryland and extensive travels and relocations to other countries have added to her decorating insight.