Value Bomb: Cash Isn’t King (Sometimes)

 In Value Bombs

Surprisingly, cash isn’t king sometimes when it comes to real estate. There is this common misconception that cash buyers are far superior to financed buyers and it’s really not true…at least not here in coastal Orange County.

A financed buyer, one who needs a loan to purchase a home, they actually tend to be more liberal with their spending. They are actually more likely to pay a higher price and if you think about it, it’s because they are not using all of their own money. They are using a good chunk of the bank’s money to back the purchase.

Versus a cash buyer; it’s all their own precious money that they have to come up with to purchase a property, so they actually tend to be a bit more conservative. So you might think there is uncertainty with financed buyers; what about their appraisal? What about their qualifications and what if they can’t get the loan?

I sell a lot of real estate and I can tell you I haven’t had a deal fall apart simply because of a low appraisal in over 6 years. So it’s really an unnecessary worry. Of course you’ll want to have a good agent that is there to advocate for the value of the property and go over comps, that sort of thing. In terms of qualifications as well, you’ll also want your agent to really scrub the buyer’s qualifications up front with a solid pre-approval letter, talk to the lender, and set the escrow up for success.

 But I can tell you, equally as many cash deals versus financed deals have fallen apart for whatever reason; the buyer is unsatisfied, they changed their mind, they found something they didn’t like. But to worry about just simply the financing aspect being a huge looming factor, it’s an unnecessary worry. 

Here’s the other real reason why cash isn’t king: the only time that a cash buyer is far superior to a financed buyer is if you have a property that is in major disrepair; it’s missing flooring it has holes in the walls, the furnace isn’t working, that sort of a thing. The loan-backed buyer doesn’t have the same incentive to give you your asking cost or more. For the most part we are talking about beautiful livable properties here along the coastline that don’t have major issues.

In conclusion, if you are selling a home it’s a good idea to take financed buyers equally as seriously as cash buyers.

 

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