When Buying in Cash Pays Off in Real Estate

When Buying in Cash Pays Off in Real Estate

Paying upfront can ensure peace of mind, convenience and a better negotiation stance

Opting for a mortgage even by high-net-worth individuals might be tempting when interest rates are low, but there are instances when paying in cash can be an advantage especially when bidding for a prestigious, rare home.

There are many of reasons why someone might choose to pay cash, but generally three key points prevail: simplicity, negotiating power and peace of mind.

For starters, a cash transaction is more straightforward, it’s easier to close, there are fewer fees and it saves time as opposed to shopping for a loan.

In addition to the convenience, cash can also be an important tool for buyers trying to negotiate the purchase price to make their bid stand out among others for the same property.

“An all-cash buyer is the most attractive to sellers, there’s no mortgage contingency…with cash on the table, the seller knows [the deal is] going to close.”- according to a recent real estate survey.

The negotiating power of cash can help buyers get a lower purchase price or a faster closing. Buyers with funds readily available have an advantage over someone dependent on a stamp of approval from a bank.

Cash can also add another level of privacy and confidentiality. Applying for a loan requires the applicant disclose a lot of information and answer a lot of questions. That’s not the case with cash.

For international transactions, taking out financing could add another point of complexity.

Cash definitely makes things move faster when buying across borders.