Home Buying in SoMa>Question Details

Tina Sarabia, Home Buyer in SoMa, San Francisco,...

if i pay cash, wil there be a price chaNGE.

Asked by Tina Sarabia, SoMa, San Francisco, CA Fri Oct 1, 2010

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Kevin Olson & Jessica Laude’s answer
Cash is always better, but don't forget about the terms. The terms (closing date, earnest money, contingencies, etc.) can have just as large of an effect a cash offer can. Cash offers, in my opinion, get accepted more often because the terms are better in the eyes of the seller (bank in some cases). More earnest money and a closing date just around the corner can do wonders for you.
0 votes Thank Flag Link Wed Oct 6, 2010
In today's market cash is king, so chances are a cash buyer will get a better price. Because loans are now a lot harder to qualify for, and many loans are taking longer than they used to, a cash offer is definitely more appealing as it gives the seller piece of mind the deal will close without any financial complications. However, the actual discount a seller is willing to give an all cash buyer will all depend on their motivation.
1 vote Thank Flag Link Wed Oct 6, 2010

Cash will certainly help and is a nice advantage to have but it will always depend on the sellers motivation and if there is any competition for the home. With that said 50% down would carry a lot of weight as well.
0 votes Thank Flag Link Sun Oct 3, 2010
Hi Tina,

It depends...each sellers situation is different. There goal is to sell there home in the shortest amount of time for the most amount of money. If an offer arises that is suitable it may behoove the seller to accept less than asking if it means the transaction can close in a week versus a month.
My recommendation would be to know what you want, research the statistics of the individual units/buildings and be prepared to make your best offer. If it's not accepted than be prepared to move on. There are a lot of good properties in SoMa.

Good luck!
Web Reference: http://www.LizeteSantos.com
0 votes Thank Flag Link Fri Oct 1, 2010
I would certaily hope so in this market. Let's put it this way, if you don't ask you will never know. Michael is right, at the close of escrow it's all the same to the seller whether the transaction is financed or cash.

Most active agents understand that Cash is a huge benefit in today's market. Find an agent who is not embarrased or shy about finding you a good buy.

What you need is a good agent who also networks well with other agents and is a pit bull on a pork chop when it comes time to negotiate.

It's not always what you say, it's how you say it. You can ask for a discount and still be classy about it. It's about the agents technique and packaging of the offer.

Good luck, Tina.


0 votes Thank Flag Link Fri Oct 1, 2010

BTW If you're reading the same book as every buyer seems to get about going to the listing agent for a better deal... Think again!

Most agents worth their salt won't 'give away' their commission, nor will they sell their client (the Seller) down the river. Of course there is good and bad in every profession... Personally I don't do dual agency except on very rare occasions and both parties are completely aware i'm in the middle. After hundreds of transactions I can still count the number of dual agency transactions on one hand.

Good luck and if you want to sit down over a cup of tea or coffee and talk without obligation, give us a call.

Mike Ackerman
Zephyr Real Estate - San Francisco
0 votes Thank Flag Link Fri Oct 1, 2010
It really depends on the seller and if they are flexible on price. As always. Everything is negotiable. If the seller really needs to sell the home quickly and if they are flexible on price then yes. But it all depends on the sellers situation.
0 votes Thank Flag Link Fri Oct 1, 2010
cash is king! but it doesn't make up for tens of thousands of dollars - If the sellers main motivation is a fast close then it might have more weight - If you are in competition with other offers then it is what these other offers are bringing to the table- If some other offer has a huge down payment , and a solid pe-approval ltter from a bank,, then it's like their offer is cash. Talk to the listing agent and try to get more information about the motivations of the sellers. Talk to your agent, maybe the lisitng agent is your agent..If you work with the listing agent she might be able to help your offer out by reducing the commission paid by the seller, because she is "working both sides of the transaction" But again, it's your whole offer that may win the property.
0 votes Thank Flag Link Fri Oct 1, 2010
The only difference cash makes to a seller are the loan contingencies and possible trepidation about lending. Realize that when a buyer gets a loan and it funds, escrow closes the seller has what thier money deposited it no longer matters if the buyer brought cash or not.

During the height of the recent financial meltdown cash was important because lenders were scarce and conditions were onerous. It isn't that way so much anymore so see is your cash means much to the seller. I'd have to say if I was on the other side I wouldn't be falling over to get your cash. Monney is all money and selling price is more important all other factors being equal.
0 votes Thank Flag Link Fri Oct 1, 2010
Jed Lane; Fog…, Real Estate Pro in San Francisco, CA
There was a time when all cash purchases carried a lot more clout than they seem to do now. Yes, cash is KING as some of my collegues have pointed out, but I recall a time when someone offering cash would pale over someone offering $30,000, $50,000 or even more with financing. So, there are some instances where, as one responder put it, if you have the cash you can wait -- meaning, you may not get every seller to see your cash offer in the best light where there is competiton. However, such an offer, if you have verifyable funds, will certainly get the seller's attention, if not their interest, especially if your offer is competitively priced.
0 votes Thank Flag Link Fri Oct 1, 2010

If what you are asking is will tendering a cash offer most likely allow for more negotiation, the answer is usually yes. The lending environment is so difficult these days that taking all the drama and wait out of that portion can often make you the winning bidder in a competitive offer situation, sometimes even over a higher bidder.

But Michael is right - in the end a financed deal will be all cash to the seller so you need to have the terms be better as well. The best thing about cash is you can close faster and with no drama over financing.

Another instance where the cash strategy doesn't help is if an owner is in a very tight equity position - cash or not, if they have to write a check to make the deal it's not going to be attractive. Cash also seems to have little impact on foreclosure properties. Banks tend to look at the bottom line dollar amount, even when the cash offer has much better terms attached.

When presenting an offer there are many components you need to take into account. Here are a few:

the actual offer
the terms
seller emotion
seller equity postion
selling the listing agent on the deal

A good broker will address all those components, and an experienced negotiator can save you a lot. We have a deal closing later this month where we got the price down from $1.8 to $1.325, and our buyer clients almost never pay asking price.

I would interview a few reputable brokers and pick one who will best serve your needs. We do a lot of business in SOMA and I also live here. If you want a no strings consult our contact info is below.

Best Regards,

Lance King/Owner-Managing Broker
DRE# 01384425
0 votes Thank Flag Link Fri Oct 1, 2010

Interesting question. To the seller at close of escrow, it is all cash whether it was financed or not. That is the fact.

I have found over many years the buyers who say they have all cash want a bigger discount than their cash is worth. If you think you are going to get 10 - 20 - or even 50 percent off, be prepared for a flat NO. These are negotiations and each one is different. A good agent will be able to finesse your best deal...

Mike Ackerman
Zephyr Real Estate
San Francisco
0 votes Thank Flag Link Fri Oct 1, 2010
Absolutely 100% yes. I've sold over 80 units in SoMa / South Beach in the last 2 years, many of them cash buyers at buildings like the Infintiy, One RIncon Hill, The Brannan, The Metropolitan, etc. If you don't get a discount with cash, then you are not respecting the cash.

I can tell you from experience the patient guy wins in real estate, and with cash, you can be patient and have a good opportunity to get a great deal.
Web Reference: http://www.paulhwang.com
0 votes Thank Flag Link Fri Oct 1, 2010

Cash is still "King!"

But to assume the price of any thing will be automatically discounted could be a big mistake. Our recommendation is work with and through a real estate professional that can present your offer(s) in a manner that empahsizes your cash offer as well as other important seller considerations. Such as a quick closing date, few or no contingencies, a sizable deposit, proof of funds documentation etc.

Good luck,

0 votes Thank Flag Link Fri Oct 1, 2010
Hi Tina,

The answer is most likely yes especially when looking in SOMA. If you are looking in many of the larger complexes in SOMA then financing can sometimes be tricky; so yes, cash should get you a better price and what Bill said previously is true. Most listing agents are going to urge their clients to take the all cash offer, but it ultimately depends on the individual needs of the seller.

As for contingencies, that is something to discuss with you agent, but I personally would always have an appraisal.

Let me know if would like to discuss market trends in SOMA or need any help constructing an offer.

Peter Brunton
Prudential CA Realty
1 Daniel Burnham Ct.
San Francisco, CA 94105
415 728 5580
DRE 01789498
0 votes Thank Flag Link Fri Oct 1, 2010
Tina when paying with cash you will also want to reduce or eliminate any contingincies and close quickly. A cash offer loaded with contingincies is no better than one with soemone getting a mortgage as that sale is not guaranteed, the buyer has a way out and teh seller has to start over. If the seller knows teh sale is definate and you are closing in 30 days or less, the seller more often will sell at a much lower price than to a buyer with contingincies.
0 votes Thank Flag Link Fri Oct 1, 2010
Make sure you know the market value of the house and if necessary have an appraisal done though you are offering cash.
Web Reference: http://www.gitabantwal.com
0 votes Thank Flag Link Fri Oct 1, 2010
Possibly, but not necessarily.
Having enough cash to purchase the house puts you in a position of strength over most buyers. You or your agent have to know how to use that position to negotiate the lower price. Show the seller that your ability to purchase with cash makes you a stronger, more sure buyer, and that security is worth giving up a few dollars to have.
0 votes Thank Flag Link Fri Oct 1, 2010
So you mean if you pay cash will you get the property for a lower price versus financing? In many cases, yes, since the seller will not have to worry about loan approval.
0 votes Thank Flag Link Fri Oct 1, 2010
Tina, Cash is king. The less contingencies that you have on an offer...the better. Most sellers would take a less for their homes, if they knew (especially in today's market) that their would be no financing to deal with. That means (usually) no appraisal as well.

To protect yourself, you might want to buy title insurance. Also a termite inspection might be in order for those purchasing in areas where termites are an issue. You might even do an appraisal if you are not sure about the price. These things are normally required by the lender.

I would suggest that you hire a buyers' agent who will protect your interests. Their fee is usually included in the price of the home. If you need help finding one, I would be glad to help you.

Brenda Feria
Real Living Eudailey Real Estate VA
Real Living at the Beach SC
0 votes Thank Flag Link Fri Oct 1, 2010
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