How to Become an All-Cash Buyer. Tips from a Mortgage Professional.
Oct 01, 2018 becoming all-cash buyer,brooklyn,brooklyn real estate,brooklyn realty,buyers,buying all-cash,cash buyer,freedom mortgage,mark maimon,mortgage loans,mortgage professional,new york,new york real estate,new york realty,real estate
We’ve worked with Mark Maimon of Freedom Mortgage several times, often partnering up to host our Buying into Brooklyn workshops, and below is an example of the expert advice he gives. You can read more of his blogs here!
Convert Your Buyers into All-Cash Buyers by Mark Maimon
It’s no secret that cash buyers have been very prevalent in our market over the past few years and that when all else is equal, a seller will almost always choose a cash offer over one with financing. That’s why we’ve come up with several ways to convert non-cash buyers into all-cash buyers by being creative with how we structure a client’s financing. Here are a few examples of situations where our team has turned an average buyer into a successful all-cash buyer:
Leveraging Another Property:
Our client wanted to purchase an $800,000 investment condo with $300,000 of her own cash being used as a down payment. She also owned a $2 million co-op free and clear, so our suggestion was to cash out the $500,000 from her co-op in advance of her finding a condo to buy. Our recommendation turned her into a cash buyer since the refinance was completed before she found a property to buy and that helped her secure the new property for a bit of a discounted price compared to the non-cash offers she was competing against. The approach also gave her a lower interest rate (investment property mortgages have higher rates compared to primary residence rates) and saved her thousands of dollars in closing costs because there is no mortgage recording tax or title insurance on co-ops.
Leveraging Other Investments:
Our client had a significant investment portfolio that he didn’t want to liquidate because the value of his stocks were lower than usual at the time. So our suggestion was to combine the cash he had on hand with a margin loan secured by his investment portfolio so he didn’t have to liquidate any of the devalued stocks. This gave him sufficient funds to become a cash buyer and as a result he was able to win a highly bidding war for a hot property. We closed a cash-out refinance on that property a couple months later so the client could pay off his margin loan. Then his stock portfolio was left unencumbered once the plan we had laid out for him had fully materialized.
Leveraging Financial Contributions from Family Members:
Our client had been outbid over and over again on her attempted $2 million townhouse purchase where she had planned to put 25% down because her offer wasn’t competitive compared to all-cash buyers or with people who had more significant down payments. We asked her if by chance she had any family members who may be willing to loan her money temporarily and as luck would have it, her grandmother was the right fit. We helped her structure a loan secured by another asset other than the subject property and as soon as those loan funds were in her account, she had the cash available to be a cash buyer and got an accepted offer on her very next bid. Right after she closed on her all-cash purchase, we did a “technical refinance” where we were able to take out the 75% financing which she then used to pay back her grandmother 45 days after acquiring the property.
As you can see from these examples, a little creativity and forethought can go a very long way to getting your clients into their new homes – even when the odds may seem to be stacked against them. Most mortgage professionals do not operate at this high of a level and as a result, their clients never know these opportunities even exist and they continue to get outbid over and over again. Our team prides itself on finding unique financing solutions to complex challenges because that’s how we add real value to our clients. Any mortgage person can handle a basic transaction, but it takes a special team like ours to come up with creative solutions like these that benefit buyers in ways they could never imagine. Contact us today to discuss what we may be able to accomplish for you and your clients!
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