FSBO wants "cash only" buyer- ideas? - Posted by Cathleen (TX)

Posted by Frank Chin on April 10, 2006 at 09:29:51:


There is “owner will not finance”, vs. “cash only”, and then there’s a THIRD WAY, “conventional financing” WITH NO CONTINGENCIES".

I’ve gotten a good below market price from a seller, but he wanted a quick sale, so I offered to do 25% down, 75% with conventional financing. He turned to his attorney and said “what if this guy gets turned down”.

So I said “what if I do 25% down, and if that’s a problem, I do 50% down with a contingency, at that level, since we we have good credit, and one can always get financing at 50% down”. His attorney and agent nodded, so the deal was done that way.

That’s because few buyers will do 50% down, and CASH ONLY buyers will want an even better price.

Did a sale that way as well. P&S contract has no contingency. While the contract called for 25% down, was advised the buyer will do 50% down, or even more if it didn’t fly.

Turns out the bank came back and asked him to do 30% down, and we completed the sale. Bank wanted to see better cash flow, and he wanted the good rates conventional financing will allow.

Had there been a contingency at 25%, I would’ve had to start all over again.

Through the years, I’ve seen sellers look at no contingency in the same light as “cash”, though you must complete the purchase if the bank turns you down intitially, and you must have a backup plan. Otherwise be prepared to pay a penalty.

Frank Chin

FSBO wants “cash only” buyer- ideas? - Posted by Cathleen (TX)

Posted by Cathleen (TX) on April 06, 2006 at 12:16:20:

Many FSBO listings in my area specify " NO owner finance- cash only" Does anyone have any ideas for working with such sellers? Are they just clearly unmotivated sellers- limiting their pool of potential buyers? Is there a form of creative financing to make deals with “Cash Only” sellers? Thanks for feedback.

Re: FSBO wants “cash only” buyer- ideas? - Posted by Joe Kaiser

Posted by Joe Kaiser on April 12, 2006 at 18:27:56:

By now I assume you understand that “cash only” simply means the
seller walks out of closing with all the cash. How the buyer gets it there
is of little concern to that seller.

It doesn’t mean the buyer isn’t getting a loan.

The other point that occurs to me is the notion that this business of
investing has something to do with the house. It almost never does.

I’m looking and testing for situations. Namely, big problems and big
equities that compell a seller to take action. I only hope there’s also a
property somewhere in the mix that is at least somewhat desirable.

An FSBO seller wanting all cash fails my test and goes onto the reject
pile. Once I’ve poked and he’s responded, I’m able to gauge where he’s
at and what his needs are. And once that’s defined and I know a good
fit won’t be had, I quickly move on.

Defining their position is critical because once defined, you have a way
to intelligently proceed (or not).

Figuring out creative plays to turn no goes into slim deals is an absurd
way to spend an afternoon. Far better to continue searching for a real
deal and when it comes into view, really hammer away on it. That way,
your time is invested in a situation of consequence where a "yes"
means a payday of consequence will ensue.

Those creative deals you try to make happen are often the worst deals
in the long run, and regretting having made one is something I can
relate to.


Re: FSBO wants “cash only” buyer- ideas? - Posted by Frank Chin

Posted by Frank Chin on April 08, 2006 at 06:01:54:


You got good answers already on why CASH, namely, the need for cash to go on to the next thing.

In the case of my dad, he had a property worth almost a million today that was bought years ago at 25K. Through the years, he thought of selling it, actually had it on the market once or twice that I can recall, and back then, there were few sources of financing for small commercial REloans, below 1MM. It would’ve have been easier if he sold it with financing.

Why didn’t he??

At one point, he was a bit tired of running around chasing for the rent, from businesses that rented the stores. So it occured to him to sell it for CASH and be DONE WITH IT.

He asked this question. If I offered financing to someone to buy this place, “does that mean I have to go chase the property owner for the MONTHLY MORTGAGE PAYMENTS”?

He was told YES.

Then he asked “what’s the difference for me between chasing for the RENT versus chasing for the mortgage”??

The answer is:

  • If someone doesn’t pay the rent, you evict him.
  • If someone doesn’t pay the mortgage, you’ll have to go thru foreclosure, much more complicated.
  • And if you collect the rent, you can profit from the appreciation.

Now that he’s in his 80’s, and WE the kids had to help a little when he had to evict a none paying tenant a short time ago, the LAST thing we want to have is for dad to sell with financing, and WE have to GO CHASE for the payments. What’s in it for me?? Do I bill dad for the gas money running around??

Of course, he can sell it with a note, and then sell the note with a DISCOUNT. BUT, wouldn’t he sell it much faster if he sold it cheaper to begin with??

Of course, at his age now, if makes no sense to sell it, but to will it to his heirs for tax reasons.

But if you have to answer my dad, “what IS the difference bewteen chasing for the rent, and chasing for note payments??” Any ideas?? Seems like the same amount of work, to my dad and me at least.

Did I miss anything??

Frank Chin

Re: FSBO wants “cash only” buyer- ideas? - Posted by Kristine-CA

Posted by Kristine-CA on April 07, 2006 at 18:49:51:

My ads when I am selling always stipulate a cash buyer. But that
doesn’t mean I haven’t been motivated. I have sold some killer deals to
cash buyers where they flipped them for big profits the same day.
Those days are over as I know more about values.

You never know what the seller needs until you call, ask…and listen
to what they have to say. Kristine

Re: FSBO wants “cash only” buyer- ideas? - Posted by Gavin Wilkinson

Posted by Gavin Wilkinson on April 06, 2006 at 17:20:09:

I would not assume anything. It could mean anything.

I am not saying the other postings are wrong. They could be those things.

But it could be as simple as they have a need for cash, and therefore cannot finance. For example, they may have a mortgage to pay off, and therefore to close the deal, you have to come to the table with cash. They may have medical bills to pay. They may want cash to buy another property.

About a year ago, I sold a lot, and I requested all cash. I needed cash to close another deal.

Sometimes the sellers that need cash can be the most motivated of all.

I would call them up and chat with them. You never know when you might find a good deal.

Re: FSBO wants “cash only” buyer- ideas? - Posted by Sean

Posted by Sean on April 06, 2006 at 13:20:13:

They are CLEARLY UNMOTIVATED… unless they are willing to sell for well under value… which nearly always they aren’t.

These types of sellers are folks who want full asking price, cash, next week and want to try to save a realtor/broker commission. They are not motivated in the least…

Generally you are barking up the wrong tree contacting these types of ads… unless you don’t mind paying full asking price and hope appreciation will make it up, and even if you are, there is no reason to deal with a FSBO v an MLS listing if that’s your game plan.

Re: FSBO wants “cash only” buyer- ideas? - Posted by DaveD (WI)

Posted by DaveD (WI) on April 06, 2006 at 12:47:16:

It means they want full retail with nothing fancy. Kinda the same as a RE broker, but they are trying to save the commission as well. Don’t waste your time, unless you enjoy their reaction to lowball offers.

Keep in mind you can’t buy 'em all. A tiny percentage of houses on the market are suited for investor purposes. This one isn’t even close to being motivated.

Re: FSBO wants “cash only” buyer- ideas? - Posted by dealmaker

Posted by dealmaker on April 06, 2006 at 12:44:21:

I’m guessing (?) that the mean “third party financing” or cash only. Not that the buyer has to bring their own cash to the table. IIRC only about 10% or so of the houses sold in the US actually sell for REAL cash.

One thing I’ve noticed when I run my ads (2/2, owner will finance with $2000 down) is that about 60% of my callers are (IMO wannabe) “investors”. Theya assume that I’m a motivated seller and that I’m going to leave a lot of money on the table for them. I’m not, and I won’t.

Maybe these sellers are tired of taking calls from “investors” who just finished a seminar.

Cathleen, if I recall you’re over in East TX right. If you were closer to Austin I’d suggest we get together and see if we could do something with some of these.


Re: FSBO wants “cash only” buyer- ideas? - Posted by Cathleen

Posted by Cathleen on April 09, 2006 at 13:03:30:

OK, I get that- it is a hassle in some situations for the owner to carry, I guess I was addressing the “cash only” in the sense that the seller is rejecting any offers that require conventional financing as well!! Saying " owner will not finance" and “cash only” are two different things to me…

good memory, dealmaker! - Posted by Cathleen

Posted by Cathleen on April 06, 2006 at 15:17:54:

Yes, I am in East Texas. I think that many potential buyers in this area cant qualify for a conventional loan and therefore it must be the first question asked of sellers, they get tired of the same question and just say, “CASH ONLY!” I have also noticed that many sellers in this area overprice their property and then let it rot on the market for a year or more. I guess there is no educating some people.