Home Buying in Lakeview>Question Details

Julie, Home Buyer in 60614

Does it usually offend sellers to make an all cash offer on a property for 80% of the listing price?

Asked by Julie, 60614 Sat May 21, 2011

Suppose there's a listing for $500K. Does making an all cash offer of $400k insult most sellers?

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Debra (Debbie) Rose’s answer
Gladys - not to be rude, but just out of curiousity, why would a buyer in Chicago feel the need to call you, in NY, for help? Besides, she wasn't asking for help - just an opinion .

You offer a 1 line "call me" response and a 12 line signature........maybe the reverse would be more helpful to a consumer in a Q&A section.
4 votes Thank Flag Link Sun May 22, 2011
Content is king.
Flag Wed Feb 20, 2013
Who cares?

Seriously, who cares if the seller is "offended"?

Besides, unless you're the Amazing Kreskin, there's no way of knowing.

To address the second point first, some sellers will be offended if you offer a penny less than the asking price. They already think their house is worth more than the listing price. Especially owners who've in some way customized or spent a lot of time on the house. I once talked to a seller who had a 3 bed/1.5 bath duplex in a blue-collar community. He wanted maybe 25% more than the comps. Why? Because he'd spent months--literally, about 3 months--meticulously painting each room. He was convinced that this justified an unreasonably high price. On the other hand, I've spoken to investors who've bought properties for 30%-40% under what the sellers were asking.

In short, unless you're a mindreader, you have no idea whether an offer will be considered "insulting."

Now to address my first point: Who cares?

A seller has three choices when receiving an offer: (1) Accept, (2) Reject, or (3) Counter. If the seller accepts your first offer (even if it's only 80% of the listing price), you probably offered too much. If the seller rejects the offer, you offered too little. You could come back and offer more. Or you could wait and--if the property is overpriced--wait for the seller to reduce the price. If the seller counters, then you're in the ballpark. You're in the game. And you haven't given up too much at the beginning.

And the seller isn't going to be your lifelong friend. Nor is the seller going to write you a glowing recommendation for your job search or for your small business. If the seller's "insulted," so be it.

And finally: At least you made an offer. Let the seller be insulted with all the people who took a look at the home and then didn't even make an offer.

Oh, and a P.S.: Make sure your offer is no greater than the value of the property. And never end up paying more. In the example I gave above of the seller with the duplex, you could have offered him 80% of what he wanted and still have overpaid. Always, always, always start off by know what the property is worth (based on comps). Then, if you choose, offer less. Don't assume that the listing price is an accurate reflection of the property's value.

Hope that helps.
4 votes Thank Flag Link Tue May 24, 2011
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
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... and even if the buyer WERE moving to Yew Nork, it's never appropriate to leave a one line answer with a 13 line signature (Debbie missed her website location) on Trulia or anywhere else for that matter, and then tell the person who left the answer to "call me".

If the writers want to know how to contact us, all they have to do is click on our names, and our profiles come up with all our information (Including disclosing our location on the internet). If they wanted to call us, they would do so.

A superstar? I think not. But she sure is out "their" (sic).

I'll look into the lobbying Congress angle, though.
4 votes Thank Flag Link Mon May 23, 2011
Alan May, Real Estate Pro in Evanston, IL
MVP'08
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Oh, sorry I forgot:

Joan Braunschweiger
RE/MAX Heritage Properties
Agent Extraordinaire
Generally Good Person
Mother of Four plus Two Cats and a Dog
Believer in World Peace, Love and all that Good Stuff
CALL ME! (not sure why, but I'm an agent so do it anyway).
3 votes Thank Flag Link Mon May 23, 2011
WAY .
3 votes Thank Flag Link Mon May 23, 2011
Often the seller counters at asking price if the offer is way low or offensive, that's the worse that would happen. if you are trying to feel out seller OK. If it is an REO bank owned foreclosure, typically those are not priced 20% over broker price opinion, BPO. If this is a high equity seller, lived there a long time and paid off mortgage you have a tougher time making the case for a cash discount. All money at closing is cash! Your question is if you get a better price for cash and i say no. If competitive situation, your cash deal looks better than a mortgage contingency, however it isnt worth 10-20% off the top. If an REO, title and deed work can take a month a mortgage contingency six weeks during that same time seller is doing title work, so net two weeks longer to wait for a mortgage. Key is to have a mortgage pre-approval vs. a mortgage pre-qualify letter from a lender. Lastly, most investors with cash waive the mortgage contingency but still use a line of credit established with a bank to finance the loan. High earnest money cash deal where the buyer is risking earnest money if they bail on the deal. If you put down a $1,000 and do cash it is not a solid deal because you might find another house you like better and walk from the deal.

If you like my answer, best answer and thumbs up me, thanks!
2 votes Thank Flag Link Sat Jul 2, 2011
HUH ?!
2 votes Thank Flag Link Mon May 23, 2011
Oy .
2 votes Thank Flag Link Mon May 23, 2011
yes .
2 votes Thank Flag Link Mon May 23, 2011
Alan May, Real Estate Pro in Evanston, IL
MVP'08
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Rock on Debbie. Rock on!
2 votes Thank Flag Link Sun May 22, 2011
Alan May, Real Estate Pro in Evanston, IL
MVP'08
Contact
Hi Julie..
Depends on the seller, their ugency to sell, and the validity of the list price!

I would say that, in general, most sellers won't jump up and down clapping their hands with glee with an offer 20% below their list price, cash or no cash.

That being siad, if the house is overpriced and has been sitting on the market for a while.........then you might be able to work something out. Just make sure your agent has smelling salts when the offer is first presented!

Kidding aside - if the home is reasonably priced.......it's unlikely $400,000 will work......but.........you have nothing to lose! Give it a try!
(what does your agent have to say, assuming you have one??)

Good luck!
2 votes Thank Flag Link Sat May 21, 2011
Hi Julie, the listing agent will tell you bring me an offer so we can see.... Not all sellers are in the same situations. Some have to sell some could wait. Are you working with a Realtor? If not at not charge to you my team and I could represent you. I could send you info what was sold in the area and also what is available on the market. I'm an Accredited Buyer Representative so let me help you. Please visit my face book page TVRealEstate and see "Home Buyers Handbook" link with 80+ pages of info.
1 vote Thank Flag Link Wed Feb 20, 2013
Gerard is right! It's all cash at closing and so the myth of cash discount needs to be blown up. At the same price, a well qualified mortgage buyer closing in 6 weeks is as good as a cash buyer closing in 2-4 weeks to get clear title on an REO home. If this is a high equity seller, they care even less! Is a 10% discount to close 2-4 weeks faster worth it? Typically not. Cash does help you edge out traditional mortgage buyer at same price though.
1 vote Thank Flag Link Fri Jul 1, 2011
Hi Julie. I've not read the other responses and I am not local to your area. I was compelled to read your question and would like to add my opinion. All scenarios aside, If you are working with a buyers broker, hopefully he/she has provided you with comps for sold property in the area so you (with the broker's help) can make an educated decision as to what an initial offer could be for the property.

You could also look at what has sold in the area and what the original listed price was. This would give you an idea of the percentage between what the list price was and what the ultimate selling price was. Now you have two ways to view comparable property prices.

The next thing would be the condition of the house. Has it been renovated? is it a '70's time capsule? is the roof in shape? Obviously you'll need to have any property inspected. The point is quality and renovation bring value. Something that requires work might fetch a lower price.

Bottom line, make an offer that feels right based on some of the specific data suggested above. Cash offers are frequently welcome by sellers as Banks have stringent requirements. Don't be concerned about offending anyone. This is just a business transaction. If the offer doesn't work for the seller, they will counter you and the game begins. Good luck.
1 vote Thank Flag Link Wed Jun 29, 2011
Some sellers are offended by offers a couple thousand below their asking price. Others expect to come down a certain amount. Sellers should realize that if they don't like the offer, they can counter or reject it. With some sellers, it is easier said than done. It isn't uncommon to see offers like the one you are asking about, or even lower, and see them accepted. You don't know until you try.
1 vote Thank Flag Link Wed Jun 29, 2011
Julie, If the positions were switched, would you be insulted? How would YOU react? And here's the good question; Is you objective to not insult the Seller, or is it to buy the house? If you want the house, make a reasonable offer based on the Comp's and the Condition. I think you know the answer to your question or you wouldn't have asked it. Good Luck.
1 vote Thank Flag Link Mon May 23, 2011
Julie - sorry if we "talked over you" for a bit, and hijacked your thread......back to you now........

Please follow up, let us know what happens with your offer. If you love the house - give it a try, as you ave nothing to lose!
All the best.........

Debbie Rose
Prudential NJ Properties
50 E Mt Pleasant Ave.
Livingston, NJ 07039
Office(973) 992-6363
Fax: (973) 992-4863
email: Debbie.Rose@PrudentialNewJersey.com
Cut her First Tooth 8/22/50
NJ Superstar in her Own Mind
Grandmother-to-be (can't wait) 9/21/2011 !

:)
1 vote Thank Flag Link Mon May 23, 2011
Oh, I'm rockin on Alan.....only at my age , it's in a rocking chair!

:)
1 vote Thank Flag Link Sun May 22, 2011
I would not be concerned about insulting the sellers just make the offer and see what the sellers do.
0 votes Thank Flag Link Thu Oct 4, 2012
If a house is listed at 175K, and the other houses on the street have all sold from 140-170, the house is estimated to be worth 146K, would 140 be too low of an offer?
0 votes Thank Flag Link Thu Oct 4, 2012
Great question and one that real estate brokers answer quite often. The biggest advantage of an all cash offer is if the house won't appraise for a loan at the seller's price. You may want to pay to have the property appraised to make sure your offered price is not too high and make that part of the contingency along with home inspection, etc.

The next best advantage is you can close faster since you don't have to wait for the lender to process the loan which may be something the seller really needs and might decide to take less money for a quick close.

Susan Agli
0 votes Thank Flag Link Tue Jan 17, 2012
In a market where "cash is king", any offer is reasonable and will not offend anyone. Just be prepared for a response that is slightly off the listing price. The Seller is trying to determine if you are determined to offer little more than the inital offer. You can just offer 82% of listing price. I think that there is a greater risk of you, the consumer, being offended by a weak counteroffer (or no counteroffer), than there is of the listing agen being offended. If the Seller wants to sell and you want to buy, there is a deal that can be worked out.

As an aside, no one in the real estate profession has any feelings. Our feelings all washed away with the financial crisis
Web Reference: http://www.pomposelli.com
0 votes Thank Flag Link Mon Jan 16, 2012
You should not base your offer on any specific percentage off the asking price whether offering cash or if you need a mortgage. You need to assess what the house is worth in todays market, and base your offer on that. Dont be afraid to make any offer... make sur eit is well presented and includes your proof of funds and limit contingincies so your offer has a better chance of being accepted.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Mon Jul 4, 2011
Hi Julie,

Never be afraid to present an offer, particularly if it is cash. The response will vary depending on location, Seller's situation and the market. It is the Broker's resposibility to present any offer, unless instructed not to do so if the price offered is below certain amount. Go for it!
0 votes Thank Flag Link Mon Jul 4, 2011
Hi Julia, I see many people have posted answers and you may be a little confused with all the information. My suggestion is to seek regional if not localized advice, as it is important to keep in mind that many aspects of buying and selling are common in certain areas but may not apply effectively everywhere. I am a broker in two states and I can tell you from one of them to another it is quite different in the behavior of the sellers on how they "see" offers. In addition, even considering the "mood" of the seller from one area of a state (or even county) compared to the sellers in another area in the same state (or county)...they may "think" somewhat different about offers and the common ediquette in presenting them.

Lastely, keep in mind that in all offers, other than asking for owner finance it is all cash to a seller. Basically your offer of $100k less than asking price based on it being a cash offer is simply telling a seller, "if I do not seek a loan for my money will you take $100k off the price?" Addtionally, there would have to be the ability for the seller to take less. Many are not in an equity position. Good luck.
0 votes Thank Flag Link Mon Jul 4, 2011
Julie, A cash offer is something that most sellers wish for. While they may have reservations on accepting offers that are 20% lower, reality usually sets in after the property is on the market over 100 days with no offers or offers that often fall through at the last minute. I think you should be more concerned with whether the $400,000 is the true value of that property to you. You are buying a piece of real estate, not paying for the current owners happiness. If you are a cash buyer and can spend $400,000 on your next purchase, by all means go for it and don't worry about offending anyone. In the current state of affairs, anyone offended by a cash offer of that magnitude needs to come to their senses.
0 votes Thank Flag Link Mon Jul 4, 2011
Julie, The worst offer is NO OFFER. In the long run, a home sells for what a buyer thinks that it is worth. The motivation of the seller is key. Sellers have different motivational factors which must be considered when preparing an offer. The lowest price is not necessarily the worst offer. Terms and conditions all play a part. ALL CASH is definitely something to be desired - No bank and no appraisal unless of course you want an appraisal.
0 votes Thank Flag Link Mon Jul 4, 2011
The short answer is no... kind of.... sometimes... yea. As you start to get to the higher end homes, the 20% difference becomes such a large number that one could be offended. $500k - 20% is much different than $100k - 20%. Cash is king and will always allow for more negotiating power. As a listing agent I would expect an "you got to be kidding, no, call back and see if it is even worth putting in a counter, otherwise no I am not interested", from my client. Would my client ever accept an offer 20% less than list price? No. I think that offering $400k on a $500k would put my client in a hard nosed/ less willing to negotiate position. Their mindset would be that you must think that they do not know what they are doing...
0 votes Thank Flag Link Sun Jul 3, 2011
Hi Julie,

I don't think it's all about the list price, I think it's more about the fair market suggested price. The real estate economy is still declining and I won't be surprised if we see another 10% drop over the next few years.

With this in mind, it further depends on how much you want this property, and how much otherws want this property. Has it been on the market for a long time? What's the suggested fair market price? Is it a short sale or a traditional sale? What's the condition of the property? Are there a lot of similar homes for sale and available, or is this property unique?

If you're looking for investment properties, feel free to check out the Las Vegas market; we have some AMAZING investment opportunities; best in the nation, in fact.

Cheers!
0 votes Thank Flag Link Fri Jul 1, 2011
Cash offers on investment properties definitively helped me buy investment property for less!
0 votes Thank Flag Link Fri Jul 1, 2011
I was told when I first acquired my license years ago that it was an insult to offer less than 80% of the asking price. As an investor I quickly learned to ignore this advice. While representing buyers I always check to comps to determine whether the asking price is on target but also in these times you have to look at the comps over a period of time to evaluate whether prices have been slowly declining. So to answer your questionsometimes it is not only not insulting but prudent to make that lower offer. One critical point though. If you absolutely love the home and have not found anything close to it proceed cautiously in evaluating those numbers because if you low ball it too much a seller can become insulted. But in this market that would be surprising. Even if they are insulted they will probably counter because of the smaller number of buyers at this time. Good luck!

Rita Wilson-DeGazon, Chicago, Il.
0 votes Thank Flag Link Fri Jul 1, 2011
It depends upon whether the listing is priced correctly. If, at $500K, the property is priced at or below market then an offer of $400K could possibly be considered an insult by a seller. If not, $400K could be considered a gift, especially if it is a cash offer.
That is where an experienced and professional Realtor® becomes a true asset. If presented properly to the seller, along with the justifying comparables and the benefits of a cash buyer, such an offer could prove to be the win-win all parties should be seeking.
0 votes Thank Flag Link Fri Jul 1, 2011
In today's market there are a lot of people submitting offers/contracts in the 70%-80% range. This does not mean that these offers get accepted. Depending on the local market/comps and the price that the house is listed at, you may be able to justify that type of offer. Also, in the case that you are an investor looking for a property to "flip", you may have to submit an offer that is lower based on the amount expenses that will be required to make a decent return. There are a lot of factors here and each transaction is different.
The one important thing that I tell my sellers is that, we don't have to accept an offer just because it was submitted. I would rather have offers/contracts coming in as oppose to no action at all. You need to have a starting point but you also need to be realistic.
One thing to remember is that people are emotionally attached to their homes.
0 votes Thank Flag Link Thu Jun 30, 2011
No, all offers do not have to be presented. The seller can instruct the agent in writting not to present any offer below a certain dollar ammount. If I was selling a house, an 80% offer is not acceptable and I would be offended.

DAVID COOPER Foreclosure Specialist in Las Vegas with 35 years Investing Experience. For a Free list of bargain homes, click website or Call +1-702-355-8807
0 votes Thank Flag Link Thu Jun 30, 2011
Taking advantage of forclosed homes is offensive.
Flag Wed Apr 25, 2012
I think you are able to close faster with out needing to get a loan and in today's lending market, I don't want to pray for the buyer to get their loan...

Don't all offers have to be presented?
0 votes Thank Flag Link Thu Jun 30, 2011
Okay again Cash is no better than an offer with a person able to finance, n which case you are asking them to take a 20% cut in something they can get near asking price for, they will wait for the offer closes to their treshold of acceptance not just because it is cash! Pssst! Cash Sale or financed sale still gives the seller the same currency at closing! A cashiers check for the amount it was sold for, so why would cash get any better preference over any other offer. The best is to off 5-7% below asking and see if they bite, they may well come back with a counter offer, you could make a better counter than first offer but usually no more than than one counter back, as they will tire and think you are jerking their chain. So if they agree with your counter offer, good if not, then accept the last counter offer and get to the closing table.
0 votes Thank Flag Link Thu Jun 30, 2011
I would think in this market an offer would be welcomed! Unless of course your not being guilded/advised by your Realtor, your Realtor should be able to show and explain what the sales are in the area your making your offer in, therefore you'll kind of have a heads up on what kind of response the seller would have from receiving your offer. So if you feel you have all the data and want to make an offer that's "cash" in this market then go for it & good luck! After all you never know what the other side is thinking/doing or needs at that time.
0 votes Thank Flag Link Thu Jun 30, 2011
An offer is an offer. The real question is does the buyer really want to purchase the property and have a shot at getting it even if they are using cash instead of a loan. It would be a shame if the buyer absolutely loved and wanted the home and another buyer outbid them. Doesn't seem like the buyers agent counseled the buyer very well about making their offer and now who has the hurt feelings? NOT the seller!
0 votes Thank Flag Link Thu Jun 30, 2011
Julie:

Who cares if you insult the seller? You have cash and want to make an offer. Get after it. The worst that can happen is they say no.

I will tell you that I find cash buyers are the most difficult buyers to deal with because they think they have the golden goose in CASH. Frankly, most sellers don't care where the money comes from as long as it closes.

Now, if you find a seller that needs to sell and you offer cash with a 14 day turn around, that 20% may not look so bad, but it is all about finding a seller that NEEDS to sell. Best
0 votes Thank Flag Link Thu Jun 30, 2011
I would have to disagree with Nathan about the Seller not caring whether or not it is a cash deal or not... In the end, money is money, but it's all about what will get them to closing and how quickly they can get there. If the Buyer is prequalified for a loan, that a good starting point. However, there are more things to getting this loan to go through than the Buyer's finances...

I have been involved with multiple all cash offers that were accepted because they were cash offers. Not only did the Seller know that there weren't any issues with financing, but they also knew that they would be able to close quickly.
0 votes Thank Flag Link Thu Jun 30, 2011
Insult a seller? How is that possible. Why is any offer an insult.

If you are serious, have the cash, and the seller wants to sell. Then it's about coming to an agreement about the sales price. If your final and highest price you are willing to pay if $400k, then make your offer.

Will the seller take your offer? Who knows. They might.

Any seller who gets "insulted" by an offer, whether cash or not, is not serious about selling-- they are emotionally attached.

But as a buyer, you should realize that the seller doesn't really care if you have cash. Because a buyer with a loan that is ready to buy and can pay them more money will most likely get the property. The seller gets cash whether it's from you or from the buyer's bank.


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Nate Wolf was recently named a FIVE STAR REALTOR by Charlotte Magazine. He is a top producing real estate sales broker, representing both buyers and sellers. He is a member of the National Association of Realtors, The Charlotte Regional Realtors Association and the Carolina Multiple Listing Services. He is licensed in multiple states and serves all areas of Metro Charlotte from Lake Norman to Lake Wylie and Uptown / Center City to SouthPark and Ballantyne.

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0 votes Thank Flag Link Thu Jun 30, 2011
I Agree with that moto. I believe a Realtor should always present any offer.
0 votes Thank Flag Link Thu Jun 30, 2011
The moto I go by is that it doesn't hurt to ask... the worst thing that they can say is "no"...
0 votes Thank Flag Link Thu Jun 30, 2011
Julie: If an owner put 20% down on a $500,000 house, then their mortgage is $400,000. How can they accept your $400,000 offer when they have to pay closing costs and commission?

DAVID COOPER Foreclosure Specialist in Las Vegas with 35 Years Investing Experience. For a Free List of
bargain homes, check website or call +1-702-499-7037
0 votes Thank Flag Link Wed Jun 29, 2011
You know it really depends on the owners situation. If they are trying to avoid foreclosure and have the equity steak to accept such an offer then it might be reasonable. On the other hand a seller might take offense and reject the offer and any future offers from you based on the insult of the first offer. You also have to factor in the what the market conditions are. So without knowing some of this pertinent information, it's really hard to say either way.
0 votes Thank Flag Link Wed Jun 29, 2011
It really depends on the marketplace where the offer is being made. Our market is a 2nd home and market and the majority of folks don't "have" to sell, so they are normally offended by such low offers. They don't understand that the distressed markets in other areas are affecting buyers' ideas about what they can offer. I always try and encourage Sellers to "counter" if they are unhappy with the offer. However, it does create an adversarial situation in most cases. You just have to rely on your realtor to advise you as to what the market is in your area.
Web Reference: http://www.LakeOconee.com
0 votes Thank Flag Link Wed Jun 29, 2011
The question your asking is hard to answer because without knowing the owners situation and how quick they need to sell the home Im working with limited info. An all cash offer is often desired because it can shorten the escrow for the owner and the buyer. The first offer is almost always countered, it's just a starting place, If you have an experience agent they will help you in placing an offer.
0 votes Thank Flag Link Wed Jun 29, 2011
Depends on the owner of the property and how well it is priced.
Web Reference: http://www.golftobeach.com
0 votes Thank Flag Link Wed Jun 29, 2011
As an investor being shrewd may not be a bad thing. The offer is just that, a starting point in the negotiation. If you get the offer accepted without counter, you probably offered too much. Just as the opposite is true. Many believe that if they do not insult the seller at least minimally that they offered too much. You do have to take other things into consideration. How long has the home been on the market? What do the comparable sales look like? What position is the seller in? Does he/she have to sell? A buyer's agent will be able to help you best. The listing agent has their obligation to the seller so you may not get the full story. You may want to look into foreclosure auctions. With all cash you can usually get good deals. In the Los Angeles metro we are buying for 65-85% of fair market value.

-Arthur
0 votes Thank Flag Link Wed Jun 29, 2011
A sales price is what a buyer and a seller agree on. I could have a $200K home and ask $750K... It wouldn't sell. In this market, any offer is better than no offer, so I would say make the offer, just understand the risks. They may counter your offer or maybe even reject it... If that is a risk you're willing to take, make the offer...
0 votes Thank Flag Link Wed Jun 29, 2011
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