Is cash still king?
Jay Thompson, the Phoenix real estate guy had an interesting question from a potential buyer inquiring whether cash was still king.
My take on the subject. Cash is always king. In real estate and in any other negotiation. Period.
You will be a stronger buyer when paying cash in today's Charleston real estate market than another buyer who will be financing the purchase of a home.
Let's face facts. There is turmoil in the mortgage market and a seller must concern themselves with whether a potential buyer can close on their purchase or will the deal fall apart because the loan can not get funded despite the buyer providing a mortgage preapproval letter.
Let's talk about contingencies. A strong buyer can write a contract with few contingencies for the seller to worry about. An offer accompanied by proof of funds, a substantial earnest money deposit, a timely closing date and only contingent upon a satisfactory home inspection is more likely to be accepted by a seller than any other competing offer. But don't mistake cash for the ability to buy significantly below market. A seller will not give their home away simply because the offer is not contingent on financing and they (and their real estate agent) should have a reasonable idea of the true value of their property.
So how low can you go.
The bottom line. Cash will not enable you to steal a home but you should be able to buy a home for less than anyone else.
Jay made an excellent point regarding using cash for the purchase vs. financing and investing your money at a higher rate of return than you are borrowing. As always, consult your financial adviser.
Picture courtesy of Flickr by julianrod.