Cash Buyer Program

What is a Cash Buyer Program?

A Cash Buyer Program allows a prospective homebuyer to make an offer on a new home without all the standard financing contingencies that are needed when making an offer while getting a traditional mortgage.

Cash Buyer Programs can be structured in various ways but there are two main types of Cash Buyer Programs available. The first and most common program utilizes a third-party that purchases the home for the client. The third-party then does an assignment of contract or nominee to the homebuyer after closing when the buyer is able to obtain standard financing.

The second and less common option is for the buyer to close and take title in their own name with the use of a short-term mortgage and then subsequently refinance that mortgage after the original purchase is closed.

Is a Cash Buyer Program right for me?

Whether or not you choose to utilize a Cash Buyer Program depends on your individual situation and tolerance for risk. In a perfect world you would get an offer accepted on your perfect home utilizing standard financing and all the protections that come along with financing, appraisal and inspection contingencies. Unfortunately, that isn’t a reality for many buyers in today’s market. For a first time homebuyer with no cash reserves and a tight budget, we would generally recommend going with a traditional mortgage and getting the underwritten pre-approval that we offer. However, if you are a buyer with solid assets looking to maximize your bargaining power and increase your chances of getting your offers accepted this program may be right for you.

Pros of using a Cash Buyer Program

• A University of San Diego Study estimated that homebuyers buying a home with a traditional mortgage pay an 11% premium compared to all-cash buyers.
• Eliminate the stress of going through the mortgage process under a deadline and risk losing the home if something goes wrong.
• Increase your chances of getting an offer accepted by 334%.

Cons of using a Cash Buyer Program

• Cost – When using a Cash Buyer/Cash Offer Program there are two transactions which means two sets of closing costs that have to be accounted for.
• Fees – Additionally Cash Buyer Programs typically have upfront fees between 1-2% of the purchase price.
• Excise Tax uncertainty – In an assignment of contract or nominee situation, there can be excise tax due for both transactions which makes the cost too high to make sense. Sammamish Mortgage’s Cash Buyer Program does not do this, so no excise would be applicable.
• Uncertainty around the appraisal – When buying a home with a Cash Buyer Program an appraisal is not completed until after the sale closes. This requires that you work with a lender that has flexible financing options and will work with you to work through unexpected issues

How Is Sammamish Mortgage’s Cash Buyer Program Different?

The Sammamish Mortgage Cash Offer Program is a new short-term first lien on the new home you are purchasing. Unlike most Cash Buyer Programs the home is not purchased by a third-party with title transferred after the fact which is viewed as a Nominee situation or Assignment of Contract. The big advantage to this is that you own the home right away and don’t risk potential high excise tax costs when the title is transferred from the third-party purchaser.

WA State, for example has already adjusted their rules related to excise tax which has caused major issues for many Cash Buyer Programs currently being offered by many online companies and local Real Estate companies.

Additionally our Cash Buyer Program allows existing homeowners to leverage the equity in their current home to use as the down payment on the new home if they intend on selling their residence shortly after buying. This can be done in place of bringing cash to the closing table.

Our Cash Buyer Program is currently available for properties located in Seattle as well as the rest of Washington State, Oregon, Idaho, Colorado and California. You can reach our expert team experienced Loan Officers at 425-401-8787.

Realtors: if you have buyers that are currently struggling to get an offer accepted, give us a call and we can discuss this option in greater detail.