Why everyone is looking for "cash buyers"?

10 Replies

Hi!

Finally I attended my first RIA meeting. This event first started by attendences talked about what they have or are looking for. All of them said "we are looking for CASH BUYERS". Why's that guys? Is it a thing between sellers? I'm thinking maybe they are wholesalers, and selling a deal to a ready-to-go investor.

Or cash buying means people who approved for a loan quickly. I'm thinking why people ask for a "cash buyers" and what is appose to? "Loan buyers"?

Thanks,

Ali

@Ali Emami Yes, it is opposed to "loan buyers." Sellers look for cash buyers because they can be ready to go, plus some properties are not in good enough condition to qualify for a loan. IMO, you will likely be able to get much better deals as a cash buyer than someone who has to go through the whole loan process. 

Spoiler alert... when you qualify as a cash buyer, the next thing they will want is you being ok with "investing" in properties that wont cash flow at the purchase price. 

The shoe is just on the foot of the seller, for now. In time it will change. 


A lot of house contracts fall apart before closing and one of the primary reasons is failure to secure financing. This can be anything from issues with the borrower to a low appraisal. Cash sales take a lot of uncertainties out of the process and in many (most) cases make an offer more appealing.

Selling to cash buyers cuts out most of the BS. 

Just look at the hundreds of post on BP weekly that goes something like this: "I got a house under contract but don't have financing or cash to buy it, can anyone give me suggestions on how to close the deal ". 

I got a great suggestion, Don't Buy a House When You Don't Have The Means To! 

@Ali Emami most of those looking for cash buyers are "Wholesalers" They are looking to sell to another investor. Often they need these deals to happen fast.  They want cash buyers to be confident the deal will go through. 

Cash buyers can usually close fast like in 2 weeks if needed. You would be surprised just how many loans don't go through causing the sale to fall through. My realtor told me of someone that after getting their offer accepted this person decided to open up a new credit card account and buy a car. Needless to say he didn't qualify now causing the realtor to have his time wasted. Eventually I think things will even out and you will see less cash buyers out there. Most of the cash buyers near me are all house flippers. But they are not big time and only do 1 house at a time. That's not to say someone couldn't go out and get a Hard money loan.

I have been seeing posts in facebook groups just about every month in relation to someone needing help fixing credit after finding out their financing fell through or selling that brand new car they just bought because their DTI is too high.

@Ali Emami

Fix and Flips typically wont be funded by a bank. Wholesalers need to offload their property quick hence need cash buyers. Cash is KING !

Best of luck in all your endeavors.  

Yes they are wholesalers who have told the seller they are paying cash. So they need a cash buyer to assign the property to. 

This is flawed thinking though. Contrary to guru "teaching", the difficult part of the equation is not finding cash buyers, it's finding good deals. Cash buyers are everywhere. But it's much easier to "teach" people how to find cash buyers than to find good deals. That would actually take some effort on the gurus part.