How to pay cash? - Posted by Randall

Posted by Matt (MPD) IL on September 10, 2004 at 11:50:49:

Oh, I’m sure it happens… just not the norm.

I wouldn’t mind being on the selling end of a transaction like that… but one question… who was responsible for sitting there counting all of them bills up and were there two people in the room at all times? :slight_smile:


How to pay cash? - Posted by Randall

Posted by Randall on September 09, 2004 at 17:54:52:

My partner and I are looking at a property to rehab. It’s a good deal as far as we can see. The seller is offering us a discount if we pay cash, and if we can close quickly.

How do we pay cash? I see the signs all the time (we pay cash) so i’m curious to how it’s done.

The house is selling for 105K, just needs drywall and some finishing, comps are in the 150-160K range. We are looking do to a loan for the mortgage and a construction loan to finish it. We have been approved for the loans already so i’m more curious about how to pay cash so i can offer it if we decide on this.


Re: How to pay cash? - Posted by Bill H

Posted by Bill H on September 10, 2004 at 09:49:14:


Listen to David Krulac he is giving you good advice. I recently closed a house in the mid six figures in four days, just long enough to get a title policy done. Owners need out, house underpriced by about 75K, I had $$$…deal done. Took longer for attorney to do closing than it did to do the rest of the deal…and…it was the seller’s attorney!

CASH TALKS…if you have immediate access to cash. USE it to YOUR advantage.

Good Luck,
Bill H

Re: How to pay cash? - Posted by E.Eka

Posted by E.Eka on September 10, 2004 at 08:28:03:

Offer 95K, that’s 65% of the lower comp of $150K. That’s the discount you should get if you pay cash. Then you and your partner, show up with a cashier’s check for the sale price amount, plus closing costs…depending on how you agreed to pay them.

I often pay cash… - Posted by David Krulac

Posted by David Krulac on September 10, 2004 at 06:10:12:

  1. one property our contract was all cash in 30 days with no mortgage contingency. I did put in an appraisal contingency. The real estate agent said that see never saw a contract structured like that. I was confident that if the property appraised that I would have no problem getting a mortgage, which is what happened. I also had several fall back positions in case some snag prevented getting the mortgage in 30 days.

  2. Most of my transactions are all cash, no mortgage contingencies, and quick settlements. There’s an old saying that you can attract more with honey than vinegar. Sellers love all cash deals with no mortgage contingencies. I’m able to close more transactions because I can move quick and have access to the cash. Needless to say, without contingencies the purchase price is lower to compensate for repairs or any adverse situation that a contingency could disclose.

  3. I’ve never lost a deal through lack of cash. If there’s a deal there, there’s a way to get the cash.

  4. Most of my buying contracts are highly simplistic, with little or no contingencies. I’ve never had a water test done, a septic test done, a radon test done, a lead based paint test, an asbestos test, a mold test, etc. Now that lenders don’t require a termite test I don’t do those either. And only a very few deals have had home inspections. I write a clean contract with either 1 or no contingencies.

Re: How to pay cash? - Posted by kwack41

Posted by kwack41 on September 09, 2004 at 18:34:39:

A loan is cash to the seller. They just don’t want to carry any paper. What is really important is that you close quickly. Find out how quickly the lender can get the loan together or if you need to use a hard money lender for quick cash.

Re: I often pay cash… - Posted by Jim

Posted by Jim on September 10, 2004 at 07:33:41:

Since when do lenders not require a termite inspection???

Every lender I deal with for conventional financing requires one.

please explain - Posted by Randall

Posted by Randall on September 09, 2004 at 18:55:00:

sorry, but can you please explain more about the cash. Why do they ask for cash when at settlement they’ll be getting a check? I don’t understand the difference. I think we can close pretty quickly, we are friends with a few lenders so we’ll see who can work the quickest. We both have excellent credit.

This would be our first REI deal after months of looking so any help will be greatly appreciated! I’m taking another look tomorrow so i would like to say ‘we can pay cash’ and know what the hell i am talking about. :slight_smile:

Re: I often pay cash… - Posted by Matt (MPD) IL

Posted by Matt (MPD) IL on September 10, 2004 at 11:48:36:

None of my commercial loans require termite inspections. These are still loans on residential property, mind you, commercial only in the fact that we are a business getting loans for investment.


Re: I often pay cash… - Posted by Rob FL

Posted by Rob FL on September 10, 2004 at 11:47:12:

FHA and VA require termite inspections, but I haven’t seen a conventional loan in several years that required a termite inspection.

Re: please explain - Posted by E.Eka

Posted by E.Eka on September 10, 2004 at 08:31:02:

Cash and checks are the same thing.
Paying all cash means that there is little or NO mortgage, which means you and the seller are subject to lender “mirigamaroll”.

Re: please explain - Posted by Mark-Chgo

Posted by Mark-Chgo on September 09, 2004 at 21:05:21:

Paying cash simply means the seller doesn’t want any mortgage contingency. If you feel comfortable enough with your preapproval and the property appraising out, make a cash offer and go ahead and get your loan. It doesn’t make a difference to the seller where the money comes from. He just wants to know the deal is 100% etched in stone.

Re: please explain - Posted by kwack41

Posted by kwack41 on September 09, 2004 at 19:27:36:

When you go to the closing table he is going to get a check. You don’t hand over a wad of cash. The check will come from the closing company but will be funded by your cash, a hard money lenders cash or a loan companies cash.

I have at times closed with my cash. I have also closed with hard money and conventional loans it all looks the same to the seller. My quess is that the seller is concerned that you will be denied for a loan or it will take to long to close.

I have had buyers tell me that they were going to purchase cash and then come to the close and sign loan documents. I didn’t really care because they closed when they said they would and I got all my money. They usually say something like “oh we decide to keep it for the long term and wanted to put a loan on it now”.

Let him know how quickly you can close and don’t make any promises you can’t keep. That’s my take on it.
Good luck.

B of A, Washington Mutual, Wells Fargo… - Posted by Jim

Posted by Jim on September 10, 2004 at 12:53:59:

are three that come to mind.

Re: please explain - Posted by Kay

Posted by Kay on September 09, 2004 at 22:39:17:

But doesn’t that conflict with the initial agreement? I mean, if the Seller was willing to give a discount BECAUSE the Buyer was paying in cash, would you still get that discount if you were getting a loan? If the closing time is the true point of it all, shouldn’t you negotiate the discount based on the fact that you can close quickly?

just asking…

Re: B of A, Washington Mutual, Wells Fargo… - Posted by Rob FL

Posted by Rob FL on September 10, 2004 at 19:39:11:

I closed a loan with Washington Mutual in 2001 and 2004 with no WDO inspection. I closed a loan with Bank of America in 2003 with no WDO inspection. Haven’t used Wells Fargo yet.

I closed loans in 2001, 2002 and 2003 with Countrywide with no WDO. I closed loans in 2003 and 2004 with First Horizon with no WDO. I closed a loan in 2002 with Principal Residential with no WDO.

I’m sure there are others that I can’t recall.

I live in Florida where there are more termites than people.

Re: please explain - Posted by Matt (MPD) IL

Posted by Matt (MPD) IL on September 10, 2004 at 04:12:51:

Writing an all cash offer is simply saying that there aren’t any finance contingencies. When you get to the closing on a cash deal, typically you’re bringing in either a certified or bank check… never, ever, ever have I seen someone actually carry a silver suitcase filled with dead presidents into a closing. In fact, I’ve heard from some closing agents that it’s completely frowned upon what with counterfitting, money laundering etc., to bring a large amount of cash to a closing. Any large sums of money get reported to the feds in those events to be sure there isn’t a situation such as I mentioned.

As you asked about closing time… yes, the amount of time it’ll take you to close is generally going to make the difference. I work with a couple lenders and have access to commercial lines of credit (i.e., warehouse lines of credit) which require only a signature on my part to receive the funds, no appraisals, no documentation, nothing. In the case in which I purchase a property I can literally close on it in as little as 3-5 days, depending on how fast the title company can get me a commitment. (I closed one house without a title policy and I’ll never do it again.)

In some cases our competition has access to approved lending which may still require an appraisal and lender approval which can take 2-3 weeks or more. From a pure timeframe standpoint (all other points being equal) our offer is better simply because there is no outside approval and we can absolutely close when we say we will.

The discount the seller is offering is for a quick close from someone who already either has the funds, can access the funds in such a way that it takes only the amount of time to actually receive the check or has a lender that does not need a final say in the process.

As someone else in this thread had mentioned (in quite a few less words than I) the seller is looking for someone who provides and iron-clad sale.

Writing an offer for all cash and getting a loan, by the way, can also be done as long as you don’t try and use lender approval to squirm out of the deal. In other words, if you write all cash and go to a bank and they say no, the seller can sue you for breach of contract. If you write the same offer and the lender says yes, as long as you can close it in the amount of time specified in the contract, it makes no difference to the seller who has made the check out to him/her. Either way, at closing they will walk out with a check that they can deposit directly into their account and at most wait 3 days for it to clear. (In my neck of the woods certified, cashier’s, and bank checks are all held for 72 hours for verification from the issuing bank.)

Hope that clears up any confusion on wording on the contract.


Re: B of A, Washington Mutual, Wells Fargo… - Posted by Dave T

Posted by Dave T on September 11, 2004 at 20:22:53:

Do you mean that there was no termite inspection, or that you did not pay for one? I just closed a loan with WaMU on a property purchase. The seller paid for the termite inspection.

In 2001, I did a refinance on my primary residence. The lender required a termite letter. Since my property was under bond with a termite treatment company, the company gave me a free inspection and wrote the letter as part of the service rendered to their bonded property clients.

A few years ago, I sold a condo in a high-rise building. The applicable state law did not require a termite inspection for any unit above the fourth floor. Since my unit was on the 15th floor, the termite inspection was not required.

I’ve been to some closings dead presidents - Posted by David Krulac

Posted by David Krulac on September 10, 2004 at 06:13:09:

were present. One guy brought a grocery store brown paper bank from the trunk of his Lincoln filled with small wrinkled bills. Most times people bring certified checks, but some like those dead presidents.

Re: B of A, Washington Mutual, Wells Fargo… - Posted by Rob FL

Posted by Rob FL on September 11, 2004 at 22:48:30:

No termite inspections, period, on any of the ones I mentioned.