Posted by Ed Garcia on January 26, 2000 at 18:43:10:
Mark;
When you know what you’re doing in this business, it’s like MAGIC.
You know MAGIC doesn’t exist, but when you see it, you can’t prove it.
It happened to you.
Ed Garcia
All cash deal? - Posted by Ben
Posted by Ben on January 25, 2000 at 23:14:00:
Hi everyone,
I have two little quick questions, please help:
-
What does it mean by ‘all cash’ deal, what i get is i will pay the seller all cash at the closing, so if i get a mortgage from the bank and pay the seller on the closing, is this an ‘all cash’ deal? So, if the deal is not ‘all cash’, then it maybe ‘owner finance’ etc., is this correct?
I think most sellers expect their buyer to get a mortgage from the bank, so what is the ‘attraction’ of an ‘all cash’ deal to the seller? Because i always heard people said when they advertise on newspaper, they will say ‘all cash’ to attract seller. -
In creative REI, it really depends on ‘motivated seller’, but in a very hot ‘seller market’, it is very seldom ‘motivated seller’, can REI in such a market become a ‘full-time’ and a sufficient income source for an individual?
Thanks a lot! Good luck in your investment!
Ben
Re: The other side of the Coin… - Posted by Ed Garcia
Posted by Ed Garcia on January 26, 2000 at 18:35:01:
Ben:
Mr. Piper gave you an excellent posting, telling it like it is.
However, and when ever I say however, you know it’s coming.
There is what I call, PERCEPTION of a deal.
You see CASH money, and LENDERS money, all spend the same.
Sellers as a whole, are willing to give a better price if it’s a cash offer
for all of the reasons that Mr. Piper gave you in his posting.
As Mr. Piper so well put , that there are usually very few contingencies
including a finance contingency that could kill the deal, when making a
CASH offer.
Ben, when I do a deal, I know before hand, how I’m going to take that deal
down. I make my offer with out a financing contingency. Now I don’t
recommend this for beginners.
Another way of doing a financed deal and making it to appear to be a cash
deal, is to put it on a working credit line. In another words, you pay cash
as far as the seller is concerned, for the property buy putting it on your line.
Objective, from the sellers stand point, FAST CLOSE, from the buyers
Stand point, LESS EXPENSIVE LOAN.
Mr. Piper has defined the differences between a CASH purchase, and a
Purchase that requires a Mortgage, both giving cash to the seller.
I just want to point out that if you are a Professional, and have been doing
this for as many years as I have. When I finish a deal, the seller never knew the difference.
Ed Garcia
Re: All cash deal? - Posted by JPiper
Posted by JPiper on January 26, 2000 at 10:28:36:
If someone told me that they were going to make me an ?all cash offer?, what I would expect to see is an offer WITHOUT financial contingency, and the ability to VERIFY the source of this cash. The cash could be in a bank?.it could be from a credit line, or it could be from the sale of stock. BUT, importantly, it would NOT be from a mortgage where there was some question as to whether it would be funded.
A true ?cash offer? has power in the marketplace because it removes one of the possible reasons that a deal might not close?..that the lender doesn?t fund the deal. And because of this, the offer is worth more than a deal where the buyer is obtaining a mortgage. Even a buyer with a letter of pre-qualification or pre-approval is not as safe as the cash buyer. Take a look sometime at the qualifications that lenders arm themselves with on these so-call pre-approval letters and you?ll know what I mean.
A cash offer can also close quickly, without appraisals, and other types of inspections that a lender in all probability will require prior to funding.
Now where you may get an argument is from those that say that the seller will see cash in the end if you get a mortgage. Don?t you listen to that?.even if Ed Garcia tells you! A mortgage may result in cash?but it?s important how you get to the cash. Cash in the bank is different than cash from a mortgage.
As to your second question, motivated sellers exist in all types of markets. As an example, a motivated seller might own a property which cannot be sold with conventional financing?.a property that is in need of significant repair. The seller does not have the cash to repair, and a potential buyer can?t use the house as collateral for financing in its existing condition. Do you think this seller is motivated? Do you think it makes a whit of difference how many first time buyers are out there? How many buyers who want nice shiny houses with new carpeting?
Whether it?s a buyers market or a sellers market don?t you think that independent of that people have financial problems? Haven?t you heard recently that bankruptcies were near an all-time high? Do you think any of these people are in foreclosure, about to lose the house? Do you think it?s possible that some of these people may have delayed dealing with their house, until they have 1 week, 3 days, or some such time remaining before they lose the house?
There are plenty of sellers out there in any type of market. There are investors who invest full time, and do very well at it. Whether you will be one of those remains to be seen. Educate yourself?that?s the first step.
JPiper
Re: All cash deal? - Posted by James Harris
Posted by James Harris on January 25, 2000 at 23:59:58:
Ben, I agree with you. “All Cash”, doesn’t really seem to go very far any more. However, timing is every thing. Suppose you found a seller who has had his property on the market for quite some time. Maybe a week, this could be a long time for some sellers. If you are knowledbable about notes(buying and selling), one could buy all the property he/she wants all day long at a discount and still give the seller all cash. About a “seller’s market”, I believe that one could worry a bit about that. Who’s doing all the buying? Why are the people selling? Just what is going on here? Here’s a question for you to ponder… if it truly is a seller’s market; isn’t also a buyers market? With all the people that are selling, is there anybody left to buy? Are there anyone left that just wants to rent? If these are buyers, do they have enough for a downpayment? Is there someway that you can help them if they don’t? Check out PACTrust…www.cal-equity.com Then make an intelligent desicion.
Re: All cash deal? - Posted by marc/Atlanta
Posted by marc/Atlanta on January 26, 2000 at 16:15:41:
JP;
I’ve read a few postings and that was one of the best.
I take it you are a REI? I’m in the same boat Ben is in. Getting all the info I can
Before getting started. All these “get rich w/OPM” seem well to good to be true, or
are they?