What Does the Term CASH ONLY Mean When Buying Real Estate?
What Does CASH ONLY Mean?
Buyers may be able to pay CASH for a property. I’ve represented many cash buyers. That’s great when my clients have the cash to purchase a home . . . but that is not the same thing, and shouldn’t be confused with a listed property that is being marketed as a CASH ONLY purchase.
While a cash buyer may purchase a cash only property, a cash only property can ONLY be purchased with cash!
A buyer who needs to borrow money, obtain a mortgage, will not be able to buy a CASH ONLY property.
Today I received the following email inquiry:
I am interested in this property. What do you mean “cash only”? Would you accept a large% down payment and the balance upon financing? Or, is it possible to pay cash and then re-finance????
The term “CASH ONLY” in a listing sheet comes from the listing agent, not an Exclusive Buyers Agent.
Second: Real estate agents DO NOT agree to the terms and conditions of a sale. I’m not sure why an inquiry to a real estate agent would include: “Would you accept . . . ” It’s the SELLER/OWNER that accepts terms and conditions.
Third: Two questions aren’t real estate related at all. They are, however, FINANCING related.
1.) A large% down payment and the balance upon financing?
2.) Or, is it possible to pay cash and then re-finance?
Since real estate agents are not licensed loan originators, they do not qualify or pre-approve borrowers.
Only a lender could answer questions about financing: 1.) finance the balance, and then 2.) re-finance.
The lender is the one who would be looking at the borrowers ability to obtain a mortgage. I do have some excellent lenders I refer, but in this particular listing . . . it wouldn’t really matter.
Why?
Because . . .
CASH ONLY MEANS . . . CASH ONLY
When a listing agent lists a property FOR SALE they will indicate ALL the TERMS which the property may be purchased.
If it were legal, the listing agent would include “First born male child” as a term — trust me!
So any (legal) terms to get that house sold will be mentioned by the listing agent.
The MORE terms . . . the MORE options for the buyer.
If the property is a CASH ONLY* purchase, and there are no other terms mentioned or accepted it means only one thing: The property WILL NOT FINANCE.
Lenders who are legit, not loan sharks, will not loan funds on a property in need of SO MUCH REPAIR that only CASH TERMS would be acceptable. And real estate agents* who list a property requiring MUCH REPAIR will only use: CASH ONLY as the term — since they know the property will not finance.
What Buyers Need to Know About CASH ONLY Terms
1) Buyers may not be able to “borrow” money to buy CASH ONLY property
2) Buyers will need CASH to buy the property
3) Buyers will need CASH to re-hab the property
4) The property WILL NOT be able to get lender financing.
5) The property WILL NOT pass appraisal in its current condition for a loan
6) One or more major components are missing, damaged, and/or in need of repair:
- Flooring gone, or urine soaked by pets
- Sub floor damaged
- Missing heater/furnace
- Roof about to cave in
- Dry rot
- Broken windows, door, walls, ceilings
- Interior water damage from roof
- Roof damaged
- Siding damage
- Rain gutters rusted
- No appliances
- Plumbing broken, and in the case of cooper, probably missing
- Electrical still on fuses
- etc.
6) The property is, more than likely, UNINHABITABLE in current conditions.
7) Property, more than likely has back taxes due, or other encumbrances and can not get title insurance
CASH ONLY MEANS . . .
. . . Please have plenty of it available to cure all the deficiencies and bring the property back to livable/inhabitable conditions
* Real Estate VARIES. In the Portland Metro market, CASH ONLY means one thing: A non-financable / hard to finance property that requires MORE than just some minor TLC