EP. 1215 CASH CASH CASH BABY... WITH PROPERTY 💰

Ever been bamboozled by the term "cash" when it comes to buying real estate? Join us as we, alongside my savvy colleague Zanthany, unravel the true meaning of cash transactions in property deals. Get ready for a session filled with lightbulb moments as we break down the cash concept, from the initial vision of wheeling in dollar bills to purchase a home, to the current landscape where cashless deals reign supreme. Whether you’re a greenhorn in the real estate game or just looking for some juicy insider knowledge, this episode is your ticket to understanding the power of "cash" in property negotiations.

Zanthany takes center stage with a tale of a client wielding "cash" as a negotiation sword, aiming for a cut in the property price. We explore the allure of cash deals to sellers and the legal tidbits you need to know when handling hefty sums. We don't just stop at clarifications and anecdotes; we also peel back the layers on the impact of living mortgage-free and the tax implications that can come with owning your property "in cash." If you're curious about how to leverage your financial position in the real estate market, this episode is packed with insights that are worth their weight in gold.

Transcript

Speaker 1: 0:02

Wow, cash, cash cash, baby and property, dough bucks, money bills, benjamins, bread, green bacon, boodle change coin, cash banknotes, chips and more. What does cash and property even mean? Stay tuned, I'm the ringleader, so wake it up. Well, good morning.

Speaker 2: 0:39

Good morning, Xanthony.

Speaker 1: 0:42

I don't really throw out that many words in such quick succession ever. I kind of felt like a rapper just then.

Speaker 2: 0:54

Yeah, so this morning we're going to talk about the dosh Dosh Cash Cash Foldable.

Speaker 1: 1:05

I'm a little bit, you know, naive, and when I first came into the real estate industry and somebody said, oh yeah, can I pay with cash, I literally thought they meant oh yeah, can I bring my suitcase full of dollar bills, full of cash, and buy the property that way, fast forward two years?

Speaker 2: 1:26

I've now since learned that that's not the case at all well, well, well, look, you know it's funny that people's interpretation in like there's so many different interpretations of of the way people would coin the phrase, and particularly this morning we're going to talk about it with property because you know, we are often confronted with, you know, people innocently using the word. We can be confronted with people using it in a naughty way. We're going to talk about that. But you know, certainly cash. You know what's really interesting and what you were just telling me before Xanthi, is the amount of cash transaction that's left. In the last three years we've halved our cash consumption over to digital, you know. So FPOS, swipe, tap, amazon, all that stuff. It's amazing how much has left. You know that's on the highly transactional version.

Speaker 2: 2:34

But even though, moving over to property, what a lot of property people don't realize is, there's a significant amount in property that has no mortgage and people will live in that property so there's no tax when they sell it. So they often refer to owning the property in cash because if they sold that property they could take that half a million dollars or a million dollars of the proceeds and they could literally cash it out because it's not taxable. So it's interesting out there that we know where people will use that. We're going to clear it up this morning how much we see. We're going to clear up the different phrases and the benefits and the non-benefits of using it. So, zanthony, over to you.

Speaker 1: 3:24

Over to me with what. So I suppose one of the conversations I even had with a client yesterday. She was very interested in one of the properties that we have for sale and wanted to kind of use this cash word as a negotiation tactic. She had said well, if I pay with cash, can I then get the property for cheaper? If I pay with cash, isn't that more attractive to a seller? If I pay with cash, doesn't that make me leaps and bounds above the rest of the competition?

Speaker 2: 4:07

so in. The great thing is, if you pay with cash is you don't have to. There's one less hurdle ie bank valuations, ie um finance. You know bank valuations for the funder, so you know there's just less. For a seller. It's attractive if it's a cash buyer, um, because they don't have to worry about them getting, you know, getting the loan and the vows and stuff like that. Um, now, when it comes to cash, what a lot of people don't know is is there's been laws that have been passed and I don't think they're new laws, but there are certainly laws that have been passed that if you're passing over in excess of $10,000 in cash, you have to legally flag and complete paperwork with the Australian government. So it straightaway eliminates that with a lot of that. Yeah, so when often people that are coining the word can I buy this with cash, they're not saying they have the bags, but they're saying you know, I'm not having to worry about finance.

Speaker 1: 5:12

I know. Just keep it simple and say I'm buying this mortgage free, I don't need to go through finances, I don't know To me cash. Like I said before, for the last two years I've literally thought of someone walking in kind of like a drug deal but for property, with their massive bag of cash, handing it over, just saying here, I'm buying this property, get your money counter up out and start counting all of the $100 bills.

Speaker 2: 5:41

Now people, and again I'll go back to what I said at the beginning. If you've just tuned in, we're talking about people coining the word or using cash, you know, with property and sort of clearing it all up this morning. But going back to you know, people's property ownership, in that in real estate Australia-wide there's over $10 trillion worth of property. Believe it or not, a significant amount and I believe it's almost one-third of Australian property is actually owned outright.

Speaker 1: 6:17

And again, people will use this as I own this place in cash, but it's not cash it's not really good going up to the bakery and getting your loaf of bread in the morning just with your door handle. That's what I'm kind of thinking when you say cash, like it's something that you can transact with, that you can pay for something with. So, yes, I'd like to get my loaf of bread with my door handle this morning. I own this in cash, not true at all.

Speaker 1: 6:48

And look, does it make you more attractive for a seller? Does it make you? I don't know. Is it a negotiation tactic? Yes, you are one kind of hurdle closer to the successful transaction in that property, but I don't think it really is something that you can negotiate down the price wall, given that the seller is going to get those funds at the end of the day, no matter how it comes to them, whether it's a cash purchase or someone that does need to go through financing absolutely, but I think, as as a society we've we've been um customized to throwing that word around with whatever we've purchased, we've always associated a cash purchase as a better purchase.

Speaker 2: 7:33

So I think it's a little bit of that as well. The actual mechanics that we've spoken about probably haven't even been considered when people use it, but they just coin it because it sounds more attractive. Now I have had people offer cash to me, which is a bribe so many many, many, many, many, many, many, many many.

Speaker 1: 7:59

I'll give you $2,000 if you give me this, that kind of thing or interesting divulge yes, yes, um.

Speaker 2: 8:11

Now, first of all, for for a real estate agent, this is called a secret commission, um, and this is, uh, not only a jailable offense but it carries huge fines and you basically wipe out your. You wipe out any, any chance of operating as an agent for the rest of your life. But once I had an extraordinarily expensive development that I was selling and I told the owner I've been asked to come to a meeting in the city and I told the owner and the owner said this sounds dodgy. And I said it actually feels dodgy.

Speaker 2: 8:53

And I went into the meeting and what do you know? The guy said if you can get me with this property, I will blah, blah. So I said look, you know can't do that, already getting paid by the seller, but you know, thank you, but you know he's got to line up like everyone else. Thank you, but you know he's got a line up like everyone else. And I went and told the owner and we had a big laugh. So in that particular property there was 18 different buyers on the on it at the time.

Speaker 1: 9:17

So that person was automatically struck off as mr dodgy yeah, absolutely, and I'm sure that happens throughout most industries, not just real estate as well.

Speaker 2: 9:28

to try and get you that leap ahead of the competition, using the cash to make yourself more attractive strong, you know, on that and you know stamp that out straight away, because when that person's talking this, these dirty four letters, um, it could lead to awful things. So I think very quickly it's like uh, uh, uh, before it even gets there.

Speaker 1: 9:56

So, yeah, very interesting it's the next four letter word in real estate cash.

Speaker 2: 10:02

Oh, it is, but, but you know, our just so people actually don't know. But as an industry we've got massive regulations about it. We actually have to keep even a gift registry, particularly in our office. We have a gift registry that anything over a dollar has to be flagged, whether it's a box of chocolates or anything that has to be flagged across our business. And if Fair Trading, our governing body, comes in and asks for the gift registry, we have to be able to supply that. So I think we've talked about cash in terms of buying property. I think we've talked about cash in terms of trying to buy real estate agents. Um, it's, it's basically I, I, I think it's dead. Um, you know, in all these facets of, of, of property and and, uh, and certainly real estate agents.

Speaker 1: 10:53

Hopefully that's cleared everything up I hope well, thank you, look, I've certainly learned something today as well. Um and bag of? You know, buying with cash does not equal a bag of cash, so thanks for joining us. Everyone equal a bag of cash and Zant. You also learnt about foldable. Yeah, I've forgotten already what foldable is. How bad is that? It's only been 11 minutes since we last spoke about it.

Speaker 2: 11:19

It's another word for cash yeah my foldable my. You can have this in cash. It's foldable. Thanks my say our cash, cash, cash. Have a great day everyone.