In this market cash is big advantage. Prices are high here. Investors, often from abroad, are buying a lot of the property. Lots of flippers too, with cash. They inflate the prices further. Rents are high too.
I live alone, am older, and friends and family are nearby,. The financial advice I get is to move away. That is hard in my situation- and so many others.
Back to the original program 
ps not intended for @kiddie!
Purchased home on an all cash basis. Did not have to show or demonstrate any proof of funds. Just gave seller two checks. One for $5,000 or $10,000 (earnest money) with the initial offer and the other check for the remaining balance once the offer was accepted.
However, most real estate markets are more competitive today. If proof of funds is required and the transaction is between two individuals, then the seller can determine what constitutes satisfactory proof of funds.
And Airbnb/VRBO investors as well. When we were buying our cabin, our realtor told us that a lot of properties in the area (around lakes in Maine in general, especially during Covid) were being scooped up by vacation rental buyers with deep pockets and weâd have to be ready with cash and willing to walk away if the price went above a reasonable non-commercial number.
Oh yes, by investors I was referring to those intending to do airbnbâs. I live in a coastal town in MA and there are zero year round rentals. Zero. I have done a winter rental for 6 years now so I can be in my town but I have had it and am looking elsewhere. This is a great place for retirees and weekenders and WFH etc. and since the pandemic ended, prices have gone, from, say $400k to $650k. In two years. A Canadian company just bought a wreck of a house in the cute downtown, small, for $705k and are gutting it. The schools have few kids from town, and depend on school choice from other towns, because families cannot afford the town anymore. I am leaving, unfortunately. The city is more affordable. (Meanwhile all my home-owning friends protest the new state requirement for more rental housing, saying it will "ruin the character of the town.) I am fortunate to have some assets, but only recently. Most of my friends are in public low income housing at this point.
Our Toledo bank wrote a letter stating we had the funds for a Phoenix home. The seller said he chose us because he was moving to Toledo.
Actually you CAN use a reverse mortgage to purchase a house. I ran the numbers on this for a friend a few years ago. In her case, meaning her age at the time, and with interest rates where they were, she could have put about 50% down and borrowed the rest with no payments for the rest of her life.
Something like this:
Price: $1,000,000
Down payment: $500,000
Reverse mortgage: $500,000
Now that interest rates are higher the numbers are less attractive.
In that case it is not reverse mortgage based on home equity but based on other assets. So an asset reduction/depletion mortgage. I am going to look into all this this week. Thanks!
Au contraire. Hereâs a link to an explanation. Iâm not recommending this company, just trying to show that a reverse mortgage can be used to purchase a home.
Pretty sure I just had to show a statement with just one of our 401Kâs that proved we had the cash to buy the property. We sure didnât have to show that it was in our bank account. We didnât cash things in until it was time to close. No way would we have to cash in before we put in the offer.
When we bought four short sale/foreclosures, I donât think we had to show proof of anything when we offered cash.
Are you over 59 1/2 - otherwise how would one access the 401K - short of a loan (not recommended).?
If you are over 59.5, then I think you can withdrawal - up to all of it.
Yes, we were over 59 1/2 when we accessed it, though for my husband, just barely. When we got our short sales, we were much younger, didnât show any proof to the banks and bought them through a jumble of low interest rate cars loans on paid off cars and HELOCs. We were juggling so many loans to get those properties, it was crazy, but they all paid off highly.
In our case (YMMV), we needed to show actual cash and not just stocks or other investments. It was a hot market and the sellers had another offer that required a conventional mortgage. There had to be no doubt that weâd have the cash on hand to close at the specified date with no worries about what could happen to the market.
It sounds to me like that was your brokerâs recommendation, not something that was required. They wanted to prove to the buyer that you could close the deal. But as far as a requirement for purchasing property, that doesnât seem realistic that you would be required to prove that you had the cash on hand right that second. I donât get to make up all the rules as a seller, but I can choose which offer I accept.
Actually, in this case the sellerâs RE agent recommended they require us to show we had cash on hand. Given the market at the time, we were not in a position to question the legality or even the necessity of doing that. We knew even before we saw that listing that weâd need to be in the strongest possible position to close a deal so we made sure we had the cash in checking, savings and money market accounts and said we could close as quickly as the seller desired. Since we expected to buy a property soon, it wasnât a big deal for us to get our ducks in a row ahead of making an offer.
A few years ago in hot market here I heard a story about a house bought by a grandmother, for her divorced daughter and grandkids. Supposedly she provided a copy of her 7-digit 401K balance for the âcashâ offer. But somehow by the time of closing there was a mortgage involved in the deal.
You arenât require to buy with cash in an âall-cashâ offer, you just canât use getting a mortgage or not liking the mortgage terms you are able to procure as a reason to get out of the purchase.
As long as you come ready to close at the purchase price agreed upon, it doesnât matter how you actually pay.
We have dealt with so many realtors over the years, some amazingly honest and competent, others just full of it and incompetent. Sometimes we just go along with it anyways when we really want to purchase the property. Fortunate for you that you had the cash, but I guarantee you they wouldnât have required you to cash out money from a retirement account before they accepted your offer. Could you imagine the lawsuitsâŠ.seller required me to take a penalty or pay large taxes, and then turned down my offer? Ugly. No doubt the brokers talked and it was easy for you to prove because youâd already made certain it was available.
The things that we have done to make a deal go through! Once we paid the short sellerâs child support judgement to the sheriff to enable the sale when there was no guarantee the sale would close. Thankfully it did. That realtor was exceptional. Another realtor told us she was going to make us pay $1,000 per day penalty every day our loan was delayed (it was delayed about a week due to the bank, and we actually got about $3700 due to a class action lawsuit against them purposefully delaying people till they lost their loan lock). Terrible, lying realtor, she single handedly almost destroyed the deal until the seller called me directly and asked if we even wanted to buy his house. Iâm sure we could start a long thread with realtor stories!
Exactly.
An âall cashâ offer is also a tool for buyers to standout as a smooth transaction when thereâs a hot sellerâs market and prices are rapidly escalating particuarliy as the buyerâs lender may not appraise the house at the offer price!
This was something that happened not infrequently in 2020-2021 when houses were receiving multiple offers; say a buyer was offering $900k on a house that sold just a couple of years earlier for $500k. Well, then their lender comes out to the house, looks it over and tells them they wonât appraise it for higher than $625k. AndâŠthe buyer doesnât have the cash to make up the difference, and while they may lose their earnest money, the seller is now stuck putting the house back on the market as the buyer canât secure the loan.
I think it would be dependent on the seller and how competitive the market is. As a seller, I would tell my agent that I want all buyers to be pre-qualified before I would contemplate their offer and I would not accept a low ball offer using all cash as an incentive. If it was a decision between all cash and a mortgage, I probably would like to see the liquid asset all in cash as it means you are ready to close the deal anytime.
From our recent experience, we had 12 offers and they were not easy to compare. We went with the highest one (by $25K), who included a letter from their bank of pre-approval for a mortgage (which was only for 50% of the offer.) It seems to not be very risky, since the mortgage amount was low, and they had that bank letter. Somehow after trying for 2 1/2 months they could not secure a mortgage (from that same bank that they had that pre-approval letter from.) We had to cancel the contract and start again. I never discovered what the issue was, I know they tried several tactics including putting a parent on the mortgage with them. My take was that pre-qualification was useless (since it was based upon the potential buyers just filling out a survey and not a complete credit check).