'Cash fast offers' is a term used amongst real estate investors when properties are purchased with cash instead of obtaining a mortgage loan. Homeowners who need to sell their house quickly are usually willing to accept lower offers if the buyer pays cash. Although sellers make less profit, the sale can be swiftly expedited.
Some mortgage companies accept cash fast offers placed on short sale properties. Short sale transactions allow borrowers to sell their home for less than the amount owed on their mortgage note. Although the lender takes a loss on the property, short sales allow them to recoup more money than if the property falls into foreclosure.
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Before entering into a short sale agreement, borrowers need to determine which type of agreement their lender offers. There are two types of agreements: Payment in Full without Pursuit of Deficiency Judgment and Deficiency Judgment.
Payment in full means the lender accepts the sale price and will not pursue the borrower for the difference. Deficiency judgment means the lender will place a judgment against the borrower for the difference between the sale price and mortgage loan balance.
For example, if the borrower owes $170,000 on his loan and obtains a cash fast offer of $140,000, a deficiency judgment will be issued for $30,000. Most people do not have an extra $30 grand lying around. If they did, chances are they wouldn't be facing foreclosure and have the need to enter into a short sale agreement.
Another reason homeowners need to sell real estate quickly stems from probate. The probate process begins when a person dies. Everything they own is transferred through the court system in order to obtain an appraisal of the estate's value. The probate process can last months or years depending on the assets involved.
Throughout the probate process, the designated estate administer is responsible for paying costs associated to the property. This might include mortgage loan payments, homeowners insurance, property taxes, and general maintenance.
These expenses are paid through the estate. If the estate does not have sufficient funds, a judge can order the administrator to sell the real estate. Most probate properties are in good condition and require few repairs. Oftentimes, houses held in probate are sold for pennies on the dollar, making them an excellent investment.
Some homeowners need to sell their house quickly due to employment relocation or military deployment. Others own vacation or rental houses they can no longer afford or unable to properly maintain. Many own their property outright and elect to sell it to eliminate financial burdens. Homeowners can increase their ability to locate buyers by lowering the purchase price to buyers who place cash offers.
With the current credit crisis, many real estate investors are buying houses with cash because they are unable to obtain financing through traditional lenders. Cash offers provide additional negotiation leverage with sellers. Cash deals can be closed in days instead of weeks and eliminates the potential for the deal to fall apart because the buyer was unable to obtain mortgage loan approval.
In today's absurd real estate market, cash is king. Investors who buy homes with cash have greater bargaining power, while providing financial relief to sellers that need to quickly liquidate real estate holdings.
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