When Cash Isn't Always King in Richmond VA Real Estate

When Cash Isn't Always King in Richmond VA Real Estate

We have all heard the expression - CASH IS KING - yet sometimes it is worth just as much as any other cards in the deck. This is especially true when it comes to the Richmond VA real estate market. Allow me to explain.

Paying with cash can cut through the red tape when it comes to purchasing a Richmond VA home for sale. As a cash buyer, you will benefit from cheaper closing costs and taking possession within a week or two, as long as the seller can vacate by your desired time frame.

So, how does cash benefit a seller? It really doesn't except it can take away the risk of a borrower losing their loan and the buyer MAY waive the appraisal, which can be a relief to the seller. Other than that, there really is no additional benefit.

Many people believe paying with cash earns them an immediate discount, yet this isn't always true. Sure, I am guilty of the same thinking from time to time and, in some cases, cash IS king. For example, my painter provided me with a little discount for paying with cash rather than using a credit card which charges the vendor a processing fee. Win-win for both parties! However, when it comes to buying a house the money from the bank is just as good as your cash in the eye of the seller.

Take a look at this illustration: Buyer Betty and Buyer Brad have both put in an offer on 123 Main Street listed at $250,000. Buyer Betty is using conventional financing with 20% down, can close in 30 days, and is offering $245,000. Buyer Brad is paying with cash, can close in just 14 days, and is offering $220,000 because Cash Is King, after-all. The seller evaluates both offers and quickly realizes he would be losing out on $25,000 if he went with Brad's offer instead of Betty's. Sure, there is always the chance Betty may not secure her financing, but for $25,000 the seller is willing to take that risk.

Since Richmond VA real estate lacks inventory, the best approach to obtaining the home of your choice is to base your offer on fair market value. As your Richmond VA real estate agent, I can help you determine that number by pulling compatible sales within the last 3-6 months of similar homes within approximately the same location. This will give us a great reference point in what the true value of the home is and you will be able to make a smart offer no matter how you intend of paying!

Ready to get started on your Richmond home search? Give me, your Richmond VA Realtor, a call today! 804-248-8207

Post a Comment