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Tuesday, April 12, 2011

Home Buyer Tip: Cash Talks But Not As Loudly As One Might Think…

I was speaking with a prospective buyer this morning who had called regarding one of my listings.  He mentioned he was “willing to pay cash if the price was right.”
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My response to him – cash is not really the incentive he thinks.

You see most serious buyers are pre-approved.  They have already gone through the process of applying for a mortgage and have been pre-approved for an established amount. 

The lender has basically said "find the property you want to purchase within these parameters - the property gets an untainted, clear title and appraisal and your financial situation does not change."

A seller may prefer cash but a lender who has approved a loan is paying with cash as well.

The process is primarily the same from a seller standpoint with the exception of the appraisal requirement. 

As a buyer do not expect a significant negotiation advantage.  Depending on circumstances the seller may give a bit of a break but I would not expect a “fire sale” price.

As to whether or not a buyer should pay cash is a question for their CPA.  Of course at the present time there is still a mortgage interest tax deduction.

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