The power of liquidity

Earlier this month, my family moved to a new house. This time, we had much more control over the entire process. We bought our new house, took the appliances and other things that we wanted, fixed up the old house, and then put it up for sale. This was all thanks to our liquidity.

Cash empowers you to make a better deal

We were not in a crunch to negotiate on the new house with any contingency clauses. Asking for a contingency clause on the sale of your existing home can make it harder to get the best deal, because the seller knows you may be tight. Remove the need for that clause, and you remove the “cost” of that convenience.

We also took what we wanted from the old house. This included the refrigerator, the window treatments, the TV & mount up on the wall, and some other things. Basically, with them removed from the property before a single potential buyer saw it, there was no need to negotiate $2000 here for window treatments, or $1000 there on the house price over a $400 appliance.

With everything gone, the house looks way bigger. It’s already a big house, but removal of all furniture makes it even more appetizing to prospective buyers.

My father-in-law and I were able to fix the handful of issues before even talking to a home inspector, propping up the quality of the house. This removes the things the buyer can complain about and start negotiating over. It doesn’t mean there will be no negotiations, just that there will be less on the table to argue over, allowing us to get to the real selling price much faster.

What made it possible? The fact that I had a big chunk of cash in the bank. With that, I’m able to carry the cost of two mortgages long enough to find the right deal.

Cash is just the first requirement

Of course, this requires having a fantastic selling agent (which I do) as well as a solid neighborhood. Since they finished every house in this subdivision over a year ago and finally finished the roads, things are ripe for the taking. Given that the comps on the house were noticeably higher than the original purchase price, and the past three years of mortgage payments had knocked out a chunk of debt, we were poised for a good sale.

But don’t forget: cash is the first requirement. Without a lot of set aside cash, many of these options simply don’t exist.

With enough cash, we can take our time, get a good price on it, collect our equity, and replenish the bank accounts. If we didn’t have such liquidity, we probably wouldn’t even have done this deal, and had to pass on this fantastic new house.

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