Does anyone know what difference a cash offer makes to the escrow process? Does it speed it up?

Why would a bank approval be necessary with a cash offer?

I don’t know if your buddy should be bragging about his deal here.. he saved a whole 10% off peak prices just a year and a half into the (probably largest RE) crash in a place you call 4closure ranch. Surely this trend is just starting.

He “needs” a home for his family, doesn’t want to rent for $2500/month

Um, $920,000 earning 8% at a 40% tax bracket leaves $44,000 after taxes.

Rent at $2500/month only requires $30,000.

A 6% mortgage on $920K after taxes runs about $5000/month when property tax and mellow roos are include.

If he need a home, there’s a slew of them to rent.

debs

Of course it was not difficult to negotiate…The bank will probadly fall all over themselves to approve this one. Yikes!

I am surprised that anyone reading the articles on this site would consider buying now or anytime soon. I realize that I am handicapped being a CPA so I place most emphasis on the financial side of the transaction. However, it is pretty obvious that the housing market in San Diego is going down for the forseeable future so your investment is/will be shrinking. Unless you can afford a six figure loss or can wait 10 or more years, you are taking a huge risk with your financial future if you have to sell when the market is down. In the 1990’s the San Diego market went down steadily for 7 years and we have a much bigger bubble this time.

My second point is that if you are considering rent vs. buy consider the entire amount you are paying out in a purchase situation. First, your house interest payment is $500 a month per $100,000 of principal at 6%. Most people will wind up paying more interest; 7% is almost $600 per month. After this you have property taxes, insurance, HOA fees, maintenance, etc. Consequently, a $500,000 home will cost you at least $3,000 a month. There is a tax deduction for the interest and taxes, but for most people this is less than 20% of what you pay out. For those of you buying larger houses there is the AMT (alternative minimum tax)to worry about if Congress “forgets” to approve their annual correction. So if you are optimistic use $500 a month per $100,000 for the after tax REAL cost of any purchase (regardless of how you finance it) when comparing rent vs. buy. Consequently a $920,000 home will have a REAL cost of at least $4,600 a month and you take the risk of a reduction in the home’s value because it isn’t going up anytime soon.

$2500 a month rent or 920k purchase is so far out of whack I can’t even criticize it for fear of violating the persons with disablities act. Using those numbers a 460k house would rent for $1250 and a 300k condo would rent for $800. If 300k condos rented for $800, nobody would buy them, I don’t mean less people I mean not a single one.

If someone wants to throw down almost a mil for what they can rent for 2500, have at it and could the bartender please me whatever that person is drinking.

He Could have done much better in 6 months to a year later….