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Discussion Starter · #1 ·
Ok maybe this has already been answered, but I searched and didn't find a definitive answer.

In the buying and selling process (any used big ticket item) a buyer paying cash is more appealing to a private seller than a buyer that has to secure/finalize financing. My question is, what is the point of diminishing returns on that appeal?

For example, you have a $5k daysailer you're trying to offload. A guy showing up wanting a break because he's paying cash isn't likely to get one, because most every potential buyer would be paying cash.

Same as above, but the boat is now a $300k cruising cat. I would assume that a guy who can stroke a check for the purchase has leverage over someone who must secure financing.

So along that line of thought (correct me if that's not accurate), what about a cash buyer in the $50k market? The $75k market? The $100k market? In those ranges does a cash buyer have a leg up over most other buyers, or are all the serious buyers paying cash?

If it makes any difference, say the boat is a 70's or early 80's "classic plastic" monohull in the 38-42' range and priced reasonably for condition/amenities. I realize no ones getting a loan with that old of a boat securing the debt, so thinking second mortgage, HELOC, etc would be a borrower's main options.
 

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For most boats I don't really see a value in a cash offer versus a financed one. Most people who buy boats are buying them as a luxury good, and therefore likely have plenty of income or wealth to support financing anyway. Unless I was looking at two side by side offers and everything was the same it wouldn't matter at all to me at any price.

Of course if the buyer wants owner financing I would walk.
 

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Yea I don't see cash offer of any advantage. You draw up the contract to state he has Xx hours to secure financing with a refundable deposit. What do you have to loose. Now if the cash offer is right now without survey then I see an advantage. But anything more than a trailer sailor will take a few days to complete anyway as you have to arrange for a slip, insurance, and whatnot.

Sent from my DROID RAZR using Tapatalk
 

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Ok maybe this has already been answered, but I searched and didn't find a definitive answer.

In the buying and selling process (any used big ticket item) a buyer paying cash is more appealing to a private seller than a buyer that has to secure/finalize financing. My question is, what is the point of diminishing returns on that appeal?

For example, you have a $5k daysailer you're trying to offload. A guy showing up wanting a break because he's paying cash isn't likely to get one, because most every potential buyer would be paying cash.

Same as above, but the boat is now a $300k cruising cat. I would assume that a guy who can stroke a check for the purchase has leverage over someone who must secure financing.

So along that line of thought (correct me if that's not accurate), what about a cash buyer in the $50k market? The $75k market? The $100k market? In those ranges does a cash buyer have a leg up over most other buyers, or are all the serious buyers paying cash?

If it makes any difference, say the boat is a 70's or early 80's "classic plastic" monohull in the 38-42' range and priced reasonably for condition/amenities. I realize no ones getting a loan with that old of a boat securing the debt, so thinking second mortgage, HELOC, etc would be a borrower's main options.
When I was on my boat hunt in that general area I did not feel that I was going to get an extra 5k off as a cash buyer.

What I did feel I got once a broker realized that I was a cash buyer definitely about to buy a boat somewhere in the next month was some more effort on their part not to lose me as a buyer.

The broker I bought through went several extra miles to make the deal happen.
 

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If you're a seller, why would you care if it's financed or not? I can think of only two reasons. One, the buyer might not get financing and the deal might fall through. Two, the boat might not appraise for the financing amount (actually a variant of the first reason) and the deal might fall through. But you the seller are no worse off unless you've turned down a cash offer in the meantime. So, you can always write a sales agreement that requires the buyer who needs financing to complete the deal within x days if you receive another (cash) offer. That way, you will not miss out on a sure thing if the financing is iffy.
 

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Whether the buyer fiances or pays cash, the seller still receives cash. The only difference that I can see is the time frame for the seller to get the cash in hand. If the buyer has pre-approved financing, that means less time than if the seller has to wait for the loan to be approved. Cash would be the time it takes to get a bank check or for a very inexpensive boat, to withdraw the cash/have the check clear.

I'm not sure that financing vs. cash weeds out the "serious" buyers. We're not going to finance our next boat but I don't think it makes us any more of a serious buyer than someone who finances. Just two different paths to the same goal.
 

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Selling private property, like a boat, generally isn't taxable income so being able to hide some cash and stuff it under the mattress doesn't gain you anything. Usually.

Do I care if you hand me fifty grand in tens and twenties, which may be counterfeit for all I know, or if you hand me a bank check for fifty grand that I can confirm as good with the bank? Not really, there's no difference to me as a seller.

The only difference "cash" makes is that it means you have been pre-approved for the loan, so to speak. Tell me you need three weeks for the laon to clear and I can say "Fine, just be aware, you've got first dabs and it is subject to prior sale" and we both come out in the same place.

Cash means "now and for sure" instead of waiting to see if a loan is approved, and all of them aren't. But in the end, I don't see "cash" buying anything different here, other than ensuring it can be a fast closing.
 

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Discussion Starter · #10 ·
ok thanks for replies so far, that's kind of what I was wondering - does cash really play a part in the negotiation? In houses or cars yes, because most people want these items whether or not they can actually afford them. In boats, maybe not so much because it's a luxury item (for most). If you can't afford it you don't buy.

And by "cash" I didn't necessarily mean counting out legal tender right there on the dock. More of a break point of "I can go get a cashier's check from the bank today for the full amount" vs "I need to finalize the second mortgage on the house so I can write you a check."

And just for the record regarding a similar (but not identical field), if I'm selling a house for $200k and you submit a "cash" offer you are a serious buyer. If you submit a "pre-approved financing" offer you may or may not be serious, depending on how much b.s you fed the mortgage agent (been down that road before, once bitten twice shy).

I've bought and sold several boats, but all were runabouts or small overnight cabin cruisers. Not big ticket items for most folks.

Thanks for the info
 

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Hey,

If a boat is priced so low (relative to other comparable boats) that it will generate multiple, immediate offers, then a 'cash' offer is attractive because the deal can be done right away. Since that's not the case with most boats, a cash offer doesn't help.

When I bought my boat (about a year ago), my offer was rejected b/c someone made a higher offer. They could not get financing, so the brokerage then accepted my offer. I didn't need financing, so it was survey (a week later) then close and delivery a few days after that.

Barry
 

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whitebread-
A cash deal is a cash deal, but any deal can be a conditional offer. Typically subject to survey and sea trials. Sometimes subject to finance and insurance approval. A contract for sale can be conditional on many things.
I think what you mean by a cash offer then, is cash on the barrelhead, taking possession right away, not conditional to anything. Also called "as is, where is".
That kind of unconditional offer should be incentive to the seller, because it means the boat is sold and gone here and now, without conditions. A bit risky for the buyer though, unless they are real sure about the condition of the boat.
 

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Discussion Starter · #13 ·
Thanks for replies so far. What I mean by cash offer is "let's schedule survey asap and I can pay on the spot after acceptable survey results.". Vs " I can pay after acceptable survey AND the bank finalizes my loan."

I think BarryL hit on an idea that might be very obvious to most of you but isn't so obvious to those of us who haven't purchased a large boat before- there isn't likely to be more than one potential buyer at a time, so if you give someone a week or two to come up with financing you aren't likely to miss out on another buyer who has funds immediately available.

Thanks again
 

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One week may not actually mean anything. Most folks would need time to find a surveyor, maybe two or three days to get some recommendations. And another day before the surveyor calls back. And if they're any good and they're booked for a few days....Just getting a surveyor to come look at a boat could take a week or two. Same thing with finance, very few places will get back to you with a decision inside of the same week, unless you've already set up something or have stellar connections. Not impossible--but "bird the hand, two in the bush" applies.
 

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Thanks for replies so far. What I mean by cash offer is "let's schedule survey asap and I can pay on the spot after acceptable survey results.". Vs " I can pay after acceptable survey AND the bank finalizes my loan."

I think BarryL hit on an idea that might be very obvious to most of you but isn't so obvious to those of us who haven't purchased a large boat before- there isn't likely to be more than one potential buyer at a time, so if you give someone a week or two to come up with financing you aren't likely to miss out on another buyer who has funds immediately available.

Thanks again
That's probably most of it. The other issue is even a can in hand, as is where is offer will still need to acquire insurance, which will normally require a recent survey anyway. So even on a 'I have a briefcase of cash' type of offer there will still generally be a lee time between the contract signing and change of posession.

Not that I have done a lot of boat sales contracts, but I can't imagine that getting all the paperwork together, new insurance bonded, slip transferred (if doing so), ect. Could reasonably be done in less than a week, and most likely a couple of weeks. This is really more than enough time to a range financing unless the buyer hits a snag for some reason (lack of assets, or valuation of the boat).
 
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