5 Benefits of Cash Buyers in Real Estate - YouTube

their property cash, if they have the cash?

Now, that's a pretty good question.

For a realtor point-of-view, it's a great thing.

When it comes to a realtor, if you have a buyer who's paying cash, typically it's a

slam dunk deal.

The buyer comes in, has the cash, find a house, put it in escrow, close the deal; done.

We collect our commission; it's a good day.

What's the benefit to the buyer, or are there benefits of a buyer bringing tons of money

in?

I mean, this is a lot of money.

Let's assume they're buying a house for $1 million.

That's a lot of money.

You see, "You know what, we do want to pay the $1 million purchase price, and we want

to purchase it all cash."

Now, why in the heck would somebody want to do that?

Why would somebody want to fork over $1 million?

There's a whole bunch of reasons why a home buyer would want to buy their house cash.

I mean, let me just go over a few.

One of the great reasons why a home buyer would probably come in with cash is, of course,

to avoid the closing costs.

Now, I think you guys remember this.

When it comes to a loan, when a buyer's going to get a loan, there typically is tons of

closing costs.

The bank just doesn't give money and say, "Here's the money.

Go buy a house."

The bank expects for the buyer to come in with closing costs.

Now the closing costs is typically ... Now, let's do the math.

The closing costs is typically 3% of a purchase price.

Let's say I'm going to buy a house a million bucks.

3% closing costs.

Do the math.

That's $30,000.

That's a lot of money.

If you pay cash, there is no lender.

If there is no lender, there is no what?

That's right, closing costs.

Right off the bat, you're saving yourself 30,000 bucks on a $1 million house purchase,

which is a great, great savings.

You're also going to save yourself some origination fees, all kinds of little fees that they have

with the bank; but the biggest cost of course is closing costs.

Another thing that the buyer is going to be saving, of course, would be the appraisal

fee.

Now, that's not such a big fee.

It's a small fee, but it's still a fee in general.

Think about it.

An appraisal typically costs, I don't know, anywhere from $400 to $600.

Not much, but by doing this purchase, by buying this home cash, you can avoid that appraisal.

But let's go here.

Hold on, let's go just one step deeper here.

Alright, here we go.

Does the buyer who is going to purchase their home cash have the right to do an appraisal?

That's a whole different topic, but let's go into it just a little bit.

Does the buyer who's going to bring cash to the deal have the right to get an appraisal

done?

Now, typically the appraisal is done to satisfy the lender.

Typically the appraisal is done to satisfy the lender.

In this case, there is no lender, so does the buyer still have the right to do an appraisal

on their purchase?

The answer is, of course.

They can keep that stipulation, they can keep that contingency in the contract.

Sure, they may say, "I'll pay all cash.

I'll pay you a $1 million cash, but the house still has to appraise at a $1 million."

Of course, the buyer can go ahead and hire someone.

It'll cost him four or five or six hundred dollars to go out there and make sure the

house is worth a million bucks.

In general, if they don't want to, they don't have to.

It is not required.

Now, why isn't it required?

Because there is no lender.

You got me?

Good.

They can save themselves some money by not having to do an appraisal.

Another benefit for the buyer, when they're buying a home cash, is there is no loan rejection.

No bank.

If there's no bank involved, no loan, there's no bank saying, "Hey, sorry, you're rejected."

That's a good thing.

Nobody wants to be rejected.

If you're buying cash, it is automatic you will qualify; because you have that green

bills there.

You can do this.

Nobody can tell you, "Sorry, it ain't going to happen."

If you've got cash, guess what, you can buy yourself a house.

Another reason why people buy cash, which is probably the biggest benefit.

This is probably the biggest benefit.

It's huge, and it's tremendously, incredibly attractive for a home buyer, if they've got

the cash, is when there's no loan, there's no interest.

Now, think about that.

When there's no loan, you're not paying any interest.

Now, you think, "Well, how much interest can there be when you do get a home loan?"

Tons.

Check this out.

Just to give you an example.

If you get a home loan for $1 million ... Let's just do the math.

Get a home loan for $1 million, $1 million for a home loan.

Especially if you're going to buy here in Los Angeles, $1 million will get you something,

I don't know, decent.

$1 million home loan.

You've got to pay your closing costs if you get a loan, all that good stuff.

Now, if you get a home loan for 30 years, which is a typical home loan duration.

A 30-year loan of a million bucks, take a guess as to how much interest you'll be paying

over the life of the loan.

Take a guess.

Yeah, you'd be paying over $700,000 of interest.

You'd be paying over $700,000 of interest if you were to get a home loan of $1 million.

That's a lot of money.

Buy the house cash, no interest; you're saving yourself over $700,000.

Now, this is on the 30-year loan, $1 million, at 4% interest rate, which is today's interest

rate, give or take.

That's a huge savings.

Now, that's the biggest reason why most people buy cash.

They don't want to have to pay anybody else any money, any interest.

This is my house, I paid it with cash, nobody else is involved but me.

That's the best benefit.

Last but not least, when it comes to buying a house cash, the great benefit also is you

can close quickly.

No loan, no need to have an appraisal done, no need to do any verification of employment,

no need to do any verification of income, no need to do any verification of anything;

all they've got to do is verify you've got the money.

That's called proof of funds.

All you've got to do is show them that you have proof that you have the money, proof

of funds, and you're in.

With cash, you can close the deal in as little as five days.

You can close it quickly.

That's great for the buyer, who wants to move in quickly.

That's great for the realtor, who would like to close this deal quickly to get that commission.

That's great for everybody, so it can be done quickly.

In a nutshell, what are the benefits for buying a house with all cash for a buyer?

A whole bunch of stuff.

Whatever we just discussed.

If you have a buyer who wants to buy cash, are you kidding me, let them buy their house

cash.

There's tons of benefit.

They know what they are doing.

And congratulations on getting a buyer who wants to buy cash.

All right, hope this helps you out.

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