Posted by Brent_IL on February 12, 2002 at 11:19:03:
An extremely high percentage of the class of all sellers only knows one way to sell. The buyer gets a mortgage, puts 10% or 20% cash down, and pays the seller for equity over the existing mortgage.
The reason the property would sell at $60K is because of the $3,000 down, and no bank qualifying. Buyers that will not, or can not go to a bank have only two major concerns; ?How much do I need to move in?? and ?What are the monthly payments?? The bump-up in selling price is not an issue.
Folks that must sell will listen to any kind of offer that solves their immediate problem.
At an appreciation rate of about 4% annually, the reality is that people who buy at retail with bank financing through a RE agent will take five to ten YEARS to recover the initial costs of buying their house. Those who say they do better are either experiencing a period of rapid appreciation (not indefinitely sustainable), or the have not accounted for all the costs.
Thanks to Jim Pasquini, over at NARS, I can show any seller that, in my marketplace, they will only net 72.9% of FMV if they pursue the traditional route.
Once the incentive for an all cash sale is eliminated, many people will consider some form of seller-financing. The naysayers who state unequivocally that sellers are better off with all cash don’t consider the ultimate destination of the cash. Based on the results of the average equities investor, would the seller be at an advantage with a foray into the stock market? Or, would they be in a better position with an income-producing note, automatically wrapped by the IRS, that they could use for dollar-cost averaging, if they so desired?
When the cash offer is negated, it?s only a matter of terms.