The Power Of Cash

[samran]

Hi all,

Wifey and I are looking to buy a place. We'll need finance for about 75% of the selling price, but we are in the position to offer the owners about 3 million baht in cash. I'm just not sure (if it is possible) how to:

a) harness that fact that we have some cashin terms of negotiating a lower price, more favourable terms etc.

what benefits the seller sees in cash - I mean after given if I get a mortgage - he'll get his money anyway!

many thanks in advance.

[yorkman]

You have hit the nail on the head surely. The seller will get the same amount of money anyway so why should they care?

On the other hand you might want to think if you can get a better rate of return on your B3M invested than the interest rate on the loan. A bit unlikely if it is a very secure return, but worth looking into?

[lannarebirth]

I usually consider the power of cash to be ALL cash, That way you are at all times ready to act in case a "must act now" distress situation opportunity arises. You have sufficient cash that I'm sure any lender would be happy to work with you. Given that, I'd try to get some kind of "pre-approval" work done at the lenders, so that of opportunity knocks, you can act immediately without the usual time consuming lender BS. Good Luck.

[churchill]

Get the finance sorted 1st then you can start negotiating - I don't think anyone would bother reducing their price until they knew you had 100% cash to offer and negotiate .

[samran]

You have hit the nail on the head surely. The seller will get the same amount of money anyway so why should they care?

my thoughts exactly.

I guess the benefit is when the seller is in distress, then it makes a little more sense to have cash.

[yorkman]

You have hit the nail on the head surely. The seller will get the same amount of money anyway so why should they care?

my thoughts exactly.

I guess the benefit is when the seller is in distress, then it makes a little more sense to have cash.

Well yes, and if you have the cash and the mortgage approved already, and they are in distress, haggle hard

Same anywhere Samran...

[Heng]

Also helps when you have competition for a particular property or properties... at LED auctions for instance.

[torrenova]

I don't understand, a mortgage is cash. The only benefit is time where one applicant has it sitting in a bank already and another potential buyer needs to start a mortgage application process.

Are you saying that you want to buy in the Bt12m range and you have 3m in cash already and want a mortgage of 9m or you want to purchase around the 3m range ?

If you get your paperwork in order then all the bank will have to do is do a valuation on the actual property you decide to buy. Make sure that you understand how long their offer of financing is open for as it is not usually more than 3 months as you personal circumstances may change etc.

[samran]

I don't understand, a mortgage is cash. The only benefit is time where one applicant has it sitting in a bank already and another potential buyer needs to start a mortgage application process.

Are you saying that you want to buy in the Bt12m range and you have 3m in cash already and want a mortgage of 9m or you want to purchase around the 3m range ?

If you get your paperwork in order then all the bank will have to do is do a valuation on the actual property you decide to buy. Make sure that you understand how long their offer of financing is open for as it is not usually more than 3 months as you personal circumstances may change etc.

thats right, in the 12m range, with 3m on hand at perhaps 3 days notice. Looking to buy a family home for me and my wife and child. We're gonna be here a while.

You post leads me to my next question - you seem to imply that it is possible to get my finances organised in advance. I didn't think this was possible here in Thailand? If so, can you let me know which banks are best for this?

edit: NB, am a Thai citizen with a western level salary. Therefore local banking options definetly open.

[tuky]

I was just at the bank this morning Samran, looking at very similar terms as yourself, except I have paid 4 mill already and have another 4 mill in the bank (plus two chanotes as collatoral) whilst looking at borrowing 9 mill.

My new house will be completed in around 2months time, when I mentioned this to the bank they told me they cannot do anything for me yet as they will need to see the completed house for their valuation.

Bangkok Bank have a deal on at the moment,

0-3 months @ 0.99%

3-9 months @ 3.85%

9- ~ @ MLR which I think is at 6.something%

[samran]

tucky,

thanks for that. Was just in SCB before, and asked the same question. Got the same answer - they'd need to see the place and place a valuation on it. Up to 70% of the valuation for a second hand town house.

Let see how it all goes.

[tuky]

tucky,

thanks for that. Was just in SCB before, and asked the same question. Got the same answer - they'd need to see the place and place a valuation on it. Up to 70% of the valuation for a second hand town house.

Let see how it all goes.

Good luck mate.

BKK Bank offered 90% of purchase price, which I thought they didn't do for a foreigner, but then again I have been lucky enough to find myself next to the branch manager at the driving range on several occassions, so perhaps it really is who you know?

Best of luck.

[JimmyTheMook]

Having been thru the loan process here with a Thai bank all I can say is be prepared for a figure much less than promised if and when the funding is actually approved.

[samran]

Having been thru the loan process here with a Thai bank all I can say is be prepared for a figure much less than promised if and when the funding is actually approved.

yes, this caught us short about 18 months ago. Am a bit more prepared now (well hopefully) in that we have cash on hand, and that - in theory - I'm paid pretty well (and Thai), have a 'decent' war chest of cash, they should be a bit more flexible. But am expecting the worst.

[tuky]

Having been thru the loan process here with a Thai bank all I can say is be prepared for a figure much less than promised if and when the funding is actually approved.

yes, this caught us short about 18 months ago. Am a bit more prepared now (well hopefully) in that we have cash on hand, and that - in theory - I'm paid pretty well (and Thai), have a 'decent' war chest of cash, they should be a bit more flexible. But am expecting the worst.

Hmm, This worries me a little.

I have been through the process before and didn't have any troubles, got the amount requested and paid it off as early as they would let me, the same applied for the car loan I took out. All A's on my redit report.

The guy I was talking to at the bank today told me not to worry as the 13 mill my place is costing is already worth 14-15 (with house incomplete) as the local government have completed about 30% of an upgrade project they have on the cards, the house is directly on a previously undiscovered/undeveloped reservior that now has a few resturaunts, exercise areas etc etc.

I actually wanted to go bank shopping thinking one of the smaller banks would be very interested in getting all of my business, but the branch manager, over a few beers and a couple of hundred balls at the driving range told me not to bother, he will look after me.

Samran, have you been shopping at all? if so, do you have any suggestions for the rest of us regarding this?

[samran]

Having been thru the loan process here with a Thai bank all I can say is be prepared for a figure much less than promised if and when the funding is actually approved.

yes, this caught us short about 18 months ago. Am a bit more prepared now (well hopefully) in that we have cash on hand, and that - in theory - I'm paid pretty well (and Thai), have a 'decent' war chest of cash, they should be a bit more flexible. But am expecting the worst.

Hmm, This worries me a little.

I have been through the process before and didn't have any troubles, got the amount requested and paid it off as early as they would let me, the same applied for the car loan I took out. All A's on my redit report.

The guy I was talking to at the bank today told me not to worry as the 13 mill my place is costing is already worth 14-15 (with house incomplete) as the local government have completed about 30% of an upgrade project they have on the cards, the house is directly on a previously undiscovered/undeveloped reservior that now has a few resturaunts, exercise areas etc etc.

I actually wanted to go bank shopping thinking one of the smaller banks would be very interested in getting all of my business, but the branch manager, over a few beers and a couple of hundred balls at the driving range told me not to bother, he will look after me.

Samran, have you been shopping at all? if so, do you have any suggestions for the rest of us regarding this?

no just started shopping, but I agree that to an extent, who you know works quite well.

Question though: are you buying a newer place or a second hand place? Banks will only lend 70% to 80% for the old place, while uo to 90% or 95% for a new build, and up to 100% if it is their own project. So it does depend to some extent on what you are buying and from whom.