Home Selling in 78624>Question Details

Debbie, Both Buyer and Seller in Hallsville, TX

we r planning on paying cash for a house. how far below the asking price should i start my offer out at?

Asked by Debbie, Hallsville, TX Sun Mar 21, 2010

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I wouldn't be as concerned about the Asking Price of the home as I would be about understanding the Current Market Value of the home. Make sure you understand what comparable properties are currently selling for in this location. Then decide how much you're willing to pay for a property and your strategy for offering on the property.
1 vote Thank Flag Link Mon Mar 22, 2010
Debbie, it really isn't that simple.

An example.

A house is priced $15k under value. You could offer asking and still get a good deal.

A house is priced $59k over value. You take $50k off and still overpay. You should figure out (or have a realtor do a CMA) what the property is worth. Then with cash offer under that amount. Cash is king and many times people take less money to know they have a sale.

Make sure you have an appraisal contingency in your contract. Just because you have cash does not mean you should overpay for a house.
1 vote Thank Flag Link Sun Mar 21, 2010
Here is a real easy answer. Twenty percent.
0 votes Thank Flag Link Sat Feb 18, 2012
Everyone says that the key to real estate is location, location, location. This is true, but with one additional fact that I believe SO strongly in, that is, "you make your money when you buy". In other words, whether you are paying cash or financing the purchase, the key is not only the location but how skillful you are in the negotiation of the price. I am a Broker in Fredericksburg, Texas with a Masters degree in Business as well as 35 years of banking and real estate experience. I have held Broker's licenses in California, Colorado, and Texas for all of my adult life. I have tried and tried to make money in the stock market but without much success. I have built a significant net worth in real estate and it is my passion to help others do the same. A recent buyer client of mine purchased a home on 7 acres with a beautiful year round creek on the property and upon closing the deal the bank approved appraisal came in $110k over the sales price. These are happy buyers when we can find someone a deal like that. So, if you are truly looking for skilled representation, take a look at my website and send me an email.
0 votes Thank Flag Link Mon Aug 30, 2010
When making an offer whether paying cash or financing, there are many variables. Depending on how long the home has been on the market, if it is under or over-priced compared to other homes on the market (when comparing size, location and features) and what the average list to sale price is in your area. Of course it always depends on the seller's motivation to sell.
Here in Fredericksburg, homes are selling for about 95% of asking price. 90% offers are low but, not usually considered offensive. Cash will make your offer stronger so, you may end negotiations a few percentage points lower in your favor. I hope you are working with a realtor who can help walk you through the negotiation process! In this market, do your research and if you are in line with the facts don't be scared to offer low. You may just be surprised at the deal you can make! Good Luck.
0 votes Thank Flag Link Tue Mar 23, 2010
I agree with you Mack....gotta know the values (regardless of list price) before an offer is made.

I may have caused some confusion with my terms, however, admittedly I never used the term "list price"...I only referenced "retail price" and "fair market value." I consider retail price to be the equivalent of Fair Market Value (FMV), not to be confused with "list price" which may or may not be the FMV / retail price.

If my neighbor wants to sell me a car with an actual value of $20K (retail price / FMV) and he wants me to buy if for his asking price (list price) of $30K, I would decline because the retail price or FMV is still $20K. So, whether it's a car or a Van Gogh or furniture, when I pay cash I expect a discount unless the "list price" is substantially below the FMV / retail price.

Just wanted to clarify.
Web Reference: http://www.phgbrokers.com
0 votes Thank Flag Link Mon Mar 22, 2010
Dan's right, and Guy is slightly off.

You make the smart purchase by knowing what the value is, not by clipping the list price. If I'm willing to sell you a Van Gogh for $100,000 - you really want to hold up the deal to bargain because you're "all cash?"
0 votes Thank Flag Link Mon Mar 22, 2010
The seller doesn't care if you pay cash or not, he gets his money at closeing. However as a seller I know a buyer is going to offer a lower price than I ask. As house priced at $300,000. I feel a good offer would be 285,
our 5% lower. Go from there- seller comes back with $290,, cash-- I would take. First off you can close faster- seller doesn't have to worry if buyer can get loan. If a seller takes a offer of 250, cash. You are not getting a deal, seller just had house over priced. You don't see too much over pricing in this market. -- I'm not a broker or a agent. I just wish to help-- maybe I did?
0 votes Thank Flag Link Mon Mar 22, 2010
Depends on the sales comps. Comparable sales for the last 90 days are all that should be taken into account. If you have to open up the geographic area to get at least 3 comparable homes sales in the last 90 days, then do so. But, don't go back in time. The market is different this Spring than it was last Fall or Summer. Your comparable sales should be current to 90 days old only.

If the home is priced to sell, your cash offer better be high enough to make the seller feel it's attractive. 100% of asking price may be a real value if the comps reflect that the home is priced right. Be careful falling into the trap of cash offers netting you a huge discount. It isn't always the case. Yes, your home purchase won't be contingent on the sale of another property, and it won't require financing approval. That's why cash is king. But, if the offer doesn't net a desirable result for the seller, they will counter or pick someone else's offer while you're trying to steal the house. Keep in mind, at closing and funding, when a home is sold for a positive gain, the end result is still cash to the seller. How they get it factors in, but isn't a set in stone rule. It just takes some of the tentative nature of the contract off the table.
Have a blessed day!
Ronda
0 votes Thank Flag Link Mon Mar 22, 2010
Caution... even when paying cash you should use a Realtor. Is this property a foreclosure or short sale? If so... rethink your strategy. It is always in your best interest to have a professional represent you. As a buyer, you do not have to pay the commission on most purchases. The Realtor will be able to help you with a starting price and assist you in your transaction. How you pay doesnt really matter.. bc its cash to the buyer in the end anyway. You should make sure that the house is inspected properly - if you can and make sure it has a clear title before proceeding. In some instances, the liens can carry over even if you pay cash. That is why I asked about the situation. It matters. Be careful and proceed with caution - seriously.
0 votes Thank Flag Link Mon Mar 22, 2010
Strong answers below. Cash is indeed King, but you should really be armed with knowledge on the house you're bidding on as well. The reality be told, it may be so under value already you may even have to offer above asking. I know, I know, with this market?Who could believe it. My point is get an experienced Realtor to assist you in making that decision with current sold comps.
Good Luck!
0 votes Thank Flag Link Sun Mar 21, 2010
1. Cash is King.
2. You make your money on a home when you buy it, not when you sell it.
3. When you pay cash, NEVER pay retail price.
4. What are comparable homes selling for in the subdivision?
5. How bad do you want this specific home?
7. How motivated is the seller (researching the public records sometimes yields a plethora of valuable info).
8. How long has the home been on the market?
9. Is the home occupied (owner or renter?) or vacant?
10. Rule of Thumb: Offer approx. 75%-85% of fair market value (assuming the home needs few repairs).
Web Reference: http://www.phgbrokers.com
0 votes Thank Flag Link Sun Mar 21, 2010
Zero + $1 would be a start......

Or you could get a realtor to do an analysis and submit a real offer.
0 votes Thank Flag Link Sun Mar 21, 2010
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