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Benefits of paying cash for a home?
Topic Started: 2 Aug 2014, 05:34 PM (3,704 Views)
Jimbo
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herbie
3 Aug 2014, 12:26 AM
Work in the mines for a decade and don't piss it ALL up against the wall?

Recall a cute little chicky babe teller down the bank one day looking at my bank account and asking "Wow, how did you get all that? Trading shares???" "Hard work 'n saving" said me - At which point she appeared to become a bit disappointed and even disinterested in continuing the conversation ... LOL!

Anyway, to the OP, yep, I've found being a cash buyer can give some advantage - Omitting the finance clause can be rather tasty bait - Because a lot can't do that pretty obviously.

As to another comment here about the potential inadvisability of telling how much you have to spend, play it by ear maybe? As I recall a time when an agent was trying to up my offer and I simply said "It's a cash offer - I don't have any more cash to offer - Take it or leave it" - They took it.
I have been a cash buyer for my last four transactions (for my primary residence) but the way I have played it is to tell the vendors that I have pre approved finance. When I negotiate the asking price, I always say that their property is X amount over my pre approved finance level. I only deal with agents at the contract negotiation stage. I never go to an agent telling them that I am looking for a 4x2 in such and such an area and that I have x amount to spend.
The main advantage with cash buying from outside the market (no property to sell) is that you have plenty of time to look around and therefore more property to choose from.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
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Foxy
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Zero is coming...

Jimbo
3 Aug 2014, 11:38 PM
I have been a cash buyer for my last four transactions (for my primary residence) but the way I have played it is to tell the vendors that I have pre approved finance. When I negotiate the asking price, I always say that their property is X amount over my pre approved finance level. I only deal with agents at the contract negotiation stage. I never go to an agent telling them that I am looking for a 4x2 in such and such an area and that I have x amount to spend.
The main advantage with cash buying from outside the market (no property to sell) is that you have plenty of time to look around and therefore more property to choose from.
Smart tactic.
Never say you got the full amount.
Peter
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Sydneyite
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Strindberg
2 Aug 2014, 08:17 PM
I couldn't do that in NSW when I bought with cash. The system there doesn't seem to allow it.
Not sure what went on there, but in NSW the rough equivelant to the QLD "unconditional/conditional" thing is the "cooling of period", which is 5 business days have exchange of signed contracts of sale. However the cooling off period is routinely waived, meaning that the contract is unconditional immediately upon exchange. Many vendors even automatically include waiving of the cooling off perion in the ir issues contract - you have to take the waiver out if you want the colling off period. Also if you buy at auction, there is no cooling off period - contract goes unconditional immediately upon contract exchange with successful bidder.

Perhaps the issue was that many buyers, including those using borrowed funds, waive the cooling off period anyway, thus removing the relative advantage a "cash" buyer might have?
stinkbug
3 Aug 2014, 07:31 PM
Pay cash for the equities and borrow to buy the house and there are no margin calls anyway, plus the interest rate is lower. Buy the right equities and you'll not really need more than a 5% deposit as the dividends will pay the whole loan, for the life of the loan.
The problem with doing it this way is the interest is not tax deductible (assuming the house is your PPOR). If you do it the way zaph suggested, you get all the benefits you espouse, PLUS tax deductibility of the interest and other loan costs.
Edited by Sydneyite, 4 Aug 2014, 09:55 AM.
For Aussie property bears, "denial", is not just a long river in North Africa.....
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A Lurker
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The main advantage that you have in a negotiation is that you can settle fast which may suit a vendor. With cash you should be able to settle easily within 3 weeks, whereas someone who is borrowing may ask for 6 weeks and someone who is selling another property may ask for 12-14 weeks. Being able to do a quick settlement may allow you to 'beat' someone who needs longer for the same money or maybe you could even pay less (I've seen this before). It will depend on the vendors situation though.
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ThePauk
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Jimbo
3 Aug 2014, 11:38 PM
I have been a cash buyer for my last four transactions (for my primary residence) but the way I have played it is to tell the vendors that I have pre approved finance. When I negotiate the asking price, I always say that their property is X amount over my pre approved finance level. I only deal with agents at the contract negotiation stage. I never go to an agent telling them that I am looking for a 4x2 in such and such an area and that I have x amount to spend.
The main advantage with cash buying from outside the market (no property to sell) is that you have plenty of time to look around and therefore more property to choose from.
Jimbo
Sounds like you have found value, added value and prospered.

When selling do you demand all offers in writing?

As for buying a PPOR by cash or equites and dividends to pay a mortgage, I would not speculate.
The stock market is still on life support systems, so investing into even so called blue chip stocks, would be risky.

I would say, that as a cash buyer, I am not sure why you would use an agent as you have a choice not to.
Find the value, approach the owner, bypass commissions, do a deal, use a solicitor to do the contracts etc.
This also means you could just take options, say $50,000 deposit on a contract that has the current owner remain in place while you get the approvals. Once the approvals are throught, stage 2 etc...

I have a friend who took did that and approached owners and got a contract that allowed him to seek approvals for a petrol station, all for a $50k risk. He did 4 before the petrol companies got pissed off and decided to use his strategy direct.
Edited by ThePauk, 4 Aug 2014, 10:27 AM.
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K-town
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ThePauk
4 Aug 2014, 10:25 AM
I would say, that as a cash buyer, I am not sure why you would use an agent as you have a choice not to.
Find the value, approach the owner, bypass commissions, do a deal, use a solicitor to do the contracts etc.
The seller will usually have signed an exclusivity agreement with an agent which, I think, means they can't sell the house without paying commissions.
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Dr Watson
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K-town
4 Aug 2014, 11:59 AM
The seller will usually have signed an exclusivity agreement with an agent which, I think, means they can't sell the house without paying commissions.
Why would anyone here take Pauk's advice on property?
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt — Bertrand Russell
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ThePauk
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K-town
4 Aug 2014, 11:59 AM
The seller will usually have signed an exclusivity agreement with an agent which, I think, means they can't sell the house without paying commissions.
Who said the property was listed with an agent? Not me. Find the value direct and do a good deal, add value and prosper.
A knock on the door will do it. Act as your own buyers agent as you have the $750k cash ready to go if you are looking for a fibro on splitable blocks.
Edited by ThePauk, 4 Aug 2014, 12:38 PM.
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zaph
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ThePauk
4 Aug 2014, 12:34 PM
Who said the property was listed with an agent?
A knock on the door will do it. Act as your own buyers agent.
Then being a cash buyer is irrelevant. You can just as easily 'knock on doors' if you are buying with a loan. Might wear out the skin on your knuckles before you find someone who wants to sell.
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ThePauk
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zaph
4 Aug 2014, 12:39 PM
Then being a cash buyer is irrelevant. You can just as easily 'knock on doors' if you are buying with a loan. Might wear out the skin on your knuckles before you find someone who wants to sell.
Zaph
That may be true or perhaps not. Depends on what you are offering? Is it a share of the final profits or the purchase of the block?
In my friends case, it was generally 20% above market value and on a 12 mth settlement (while approvals were sought). He did not get any sore knuckles.

Point is, that is the OP'er may find the property from those that are not listed. He may have greater success from a split/build options.
This may apply to his current situation as he also may find a property that is not listed and is still suitable and buyable.
Edited by ThePauk, 4 Aug 2014, 12:47 PM.
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