What does "all cash" mean?

[Anonymous]

Anonymous wrote:I have made two all cash offers with no contingencies -- one on a townhouse in a highly desirable area of the DMV, and the other on a second home. In both instances, I provided an automatically generated letter from my brokerage firm showing that we had a larger balance in the account that we planned to use than the asking price for the house. That was the only thing that we provided, and it was deemed sufficient.

In one of the cases, we paid for the house in cash from that account but after closing immediately turned around and got ourselves a mortgage. If you do that within 60 days (I think) it's treated as a home purchasing mortgage and not as a refinance or a home equity loan. That makes the terms a little better.

You did what now? That's not the way! Was it FSBO and no one advised you?

[Anonymous]

It means the buy wires the entire purchase price plus closing costs to the seller on the closing day.

[Anonymous]

Anonymous wrote:B.

No mortgage is involved so no unforeseen circumstance (as in bank denies mortgage if the appraisal comes back less than the offer ...).

Yes, you have to provide bank statements with the offer.

OP here. Could I provide the bank statements, and waive the financing and appraisal contingencies, then still turn around and get a mortgage? That would still make me "all cash", right? Maybe it makes no difference, but it seems like sellers are increasingly obsessed with getting an "all cash" offer. I guess I'm just trying to figure out if lots of these "all cash" buyers show the assets on paper, then just turn around and get a mortgage.

[Anonymous]

Anonymous wrote:

Anonymous wrote:B.

No mortgage is involved so no unforeseen circumstance (as in bank denies mortgage if the appraisal comes back less than the offer ...).

Yes, you have to provide bank statements with the offer.

OP here. Could I provide the bank statements, and waive the financing and appraisal contingencies, then still turn around and get a mortgage? That would still make me "all cash", right? Maybe it makes no difference, but it seems like sellers are increasingly obsessed with getting an "all cash" offer. I guess I'm just trying to figure out if lots of these "all cash" buyers show the assets on paper, then just turn around and get a mortgage.

You would not be a cash buyer in this case. Cash buyers can close much more quickly than a mortgage buyer. What you are describing is a mortgage situation. Doesn’t matter that you have enough in the bank to buy in cash. The fact that you are going through a bank means that you are not all cash.

[Anonymous]

it all depends.

the GCAAR standard contract includes language in the all-cash/non-contingent option that means the sellers cannot prevent the buyer from getting a mortgage. however, typical all-cash offers these days include other features that would preclude a mortgage before close, like a 10-day close.

like another commenter, i have gone both routes. one time i sold stock and paid cash, and then got a mortgage within the 90-day window for the IRS to treat it as a mortgage for acquisition. another time there were enough delays in our closing due to lot line issues that we ended up just getting a mortgage to close. (originally were going to borrow the cash to close from family and then do a mortgage of acquisition, but there was ultimately no need.)

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:B.

No mortgage is involved so no unforeseen circumstance (as in bank denies mortgage if the appraisal comes back less than the offer ...).

Yes, you have to provide bank statements with the offer.

OP here. Could I provide the bank statements, and waive the financing and appraisal contingencies, then still turn around and get a mortgage? That would still make me "all cash", right? Maybe it makes no difference, but it seems like sellers are increasingly obsessed with getting an "all cash" offer. I guess I'm just trying to figure out if lots of these "all cash" buyers show the assets on paper, then just turn around and get a mortgage.

You would not be a cash buyer in this case. Cash buyers can close much more quickly than a mortgage buyer. What you are describing is a mortgage situation. Doesn’t matter that you have enough in the bank to buy in cash. The fact that you are going through a bank means that you are not all cash.

no, OP would still be considered a cash buyer, unless they needed to delay close to allow for financing concerns.

as long as they can show the assets and the money shows up in the settlement attorneys escrow account the day it is supposed to, no one cares which account initiated the wire.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I have made two all cash offers with no contingencies -- one on a townhouse in a highly desirable area of the DMV, and the other on a second home. In both instances, I provided an automatically generated letter from my brokerage firm showing that we had a larger balance in the account that we planned to use than the asking price for the house. That was the only thing that we provided, and it was deemed sufficient.

In one of the cases, we paid for the house in cash from that account but after closing immediately turned around and got ourselves a mortgage. If you do that within 60 days (I think) it's treated as a home purchasing mortgage and not as a refinance or a home equity loan. That makes the terms a little better.

You did what now? That's not the way! Was it FSBO and no one advised you?

it's absolutely the way. as long as the mortgage closes within 90 days of the house sale, it can be deducted as a mortgage for acquisition in your taxes.

also some banks are squirrely about lending to self-employed people, but are willing to put, say, a 60% mortgage on an already acquired property.

one bonus of paying cash is that you can get a title insurance policy for the entire property value, and then get a separate policy for the mortgage holder later.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Most times there is zero advantage to it. Not sure why people talk about it so much.

If you have offers both presented without contingencies go with the highest offer. Cash or not.

Even if the appraisal comes in low, without an appraisal contingency there is no difference.

+1 the seller always gets all cash. They don't care if it's from the back or from you.

While I agree with you -- my realtor seems to think the cash offers win more often and that I am at a disadvantage.

[Anonymous]

If you can’t close in “cash” you have bad credit. I say that as Chase gave me a line of credit and a check book for full price of home based off my credit.

The check was to buy home “cash” then chase would convert it to 30 day mortgage after closing.

To the buyer it looks like cash.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I have made two all cash offers with no contingencies -- one on a townhouse in a highly desirable area of the DMV, and the other on a second home. In both instances, I provided an automatically generated letter from my brokerage firm showing that we had a larger balance in the account that we planned to use than the asking price for the house. That was the only thing that we provided, and it was deemed sufficient.

In one of the cases, we paid for the house in cash from that account but after closing immediately turned around and got ourselves a mortgage. If you do that within 60 days (I think) it's treated as a home purchasing mortgage and not as a refinance or a home equity loan. That makes the terms a little better.

You did what now? That's not the way! Was it FSBO and no one advised you?

it's absolutely the way. as long as the mortgage closes within 90 days of the house sale, it can be deducted as a mortgage for acquisition in your taxes.

also some banks are squirrely about lending to self-employed people, but are willing to put, say, a 60% mortgage on an already acquired property.

one bonus of paying cash is that you can get a title insurance policy for the entire property value, and then get a separate policy for the mortgage holder later.

No i man the stupidity of liquidating a brokerage account only to get a mortgage later

[Anonymous]

sometimes people intended to liquidate anyway. i sold stock option shares that needed to be liquidated.

most people if they have sufficient holdings should be able to get a margin loan to bridge until the mortgage comes through, with no need to liquidate.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I have made two all cash offers with no contingencies -- one on a townhouse in a highly desirable area of the DMV, and the other on a second home. In both instances, I provided an automatically generated letter from my brokerage firm showing that we had a larger balance in the account that we planned to use than the asking price for the house. That was the only thing that we provided, and it was deemed sufficient.

In one of the cases, we paid for the house in cash from that account but after closing immediately turned around and got ourselves a mortgage. If you do that within 60 days (I think) it's treated as a home purchasing mortgage and not as a refinance or a home equity loan. That makes the terms a little better.

You did what now? That's not the way! Was it FSBO and no one advised you?

What the hell are you talking about when you say “it’s not the way?”

Sure it was. Of course we had an agent. We made an all cash offer with a quick turnaround on closing to get ourselves a rental property for under asking in a competitive market, then got ourselves a mortgage on the property right after we closed. What’s the problem? We never planned on not having a mortgage. We’d be crazy not to have a mortgage on a rental property where the interest is written off again the rent.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:B.

No mortgage is involved so no unforeseen circumstance (as in bank denies mortgage if the appraisal comes back less than the offer ...).

Yes, you have to provide bank statements with the offer.

OP here. Could I provide the bank statements, and waive the financing and appraisal contingencies, then still turn around and get a mortgage? That would still make me "all cash", right? Maybe it makes no difference, but it seems like sellers are increasingly obsessed with getting an "all cash" offer. I guess I'm just trying to figure out if lots of these "all cash" buyers show the assets on paper, then just turn around and get a mortgage.

You would not be a cash buyer in this case. Cash buyers can close much more quickly than a mortgage buyer. What you are describing is a mortgage situation. Doesn’t matter that you have enough in the bank to buy in cash. The fact that you are going through a bank means that you are not all cash.

This.

I’m the poster who got a mortgage AFTER paying all cash for the house. That’s easily doable and the seller doesn’t care.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:B.

No mortgage is involved so no unforeseen circumstance (as in bank denies mortgage if the appraisal comes back less than the offer ...).

Yes, you have to provide bank statements with the offer.

OP here. Could I provide the bank statements, and waive the financing and appraisal contingencies, then still turn around and get a mortgage? That would still make me "all cash", right? Maybe it makes no difference, but it seems like sellers are increasingly obsessed with getting an "all cash" offer. I guess I'm just trying to figure out if lots of these "all cash" buyers show the assets on paper, then just turn around and get a mortgage.

You would not be a cash buyer in this case. Cash buyers can close much more quickly than a mortgage buyer. What you are describing is a mortgage situation. Doesn’t matter that you have enough in the bank to buy in cash. The fact that you are going through a bank means that you are not all cash.

no, OP would still be considered a cash buyer, unless they needed to delay close to allow for financing concerns.

as long as they can show the assets and the money shows up in the settlement attorneys escrow account the day it is supposed to, no one cares which account initiated the wire.

I disagree. No bank is going to give the buyer a mortgage without an appraisal, even when the buyer waives the financing contingency. So the bank will have to get into the house before closing and it would be clear to the seller that we’re not talking about an all cash deal.

[Anonymous]

Anonymous wrote:If you can’t close in “cash” you have bad credit. I say that as Chase gave me a line of credit and a check book for full price of home based off my credit.

The check was to buy home “cash” then chase would convert it to 30 day mortgage after closing.

To the buyer it looks like cash.

What kind of credit? A HELoC on your previous (or additional) real estate? Margin from your stock brokerage?

Wholly unsecured credit for the price of a house is a ridiculously higher level of "credit" than qualifying for an easily affordable mortgage.