If offering cash for a property, what percentage under list or short sale price could a person expect to pay?

Asked by Clouded1118, Orlando, FL Wed Jan 5, 2011

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Oggi Kashi, Agent, San Francisco, CA
Sat Jan 8, 2011
Whether you are paying all cash or using a loan, the end result is the same to the seller. The only time you have an advantage and might want to offer a lower price is when the property location and/or condition makes it impossible or at least very difficult to acquire a loan. That's when your cash is king.

Oggi Kashi
Paragon Real Estate Group
DRE# 01844627
Web Reference:  http://www.oggikashi.com/
2 votes
Mark Weber, Agent, Naples, FL
Sun Jan 9, 2011
Short Sale list prices are hogwash. So, if the short sale price is arbitrary then any percentage off that price anyone gives you would be arbitrary.

Many agents set short sale prices well under what the lender/bank will actually take to get an offer on the table. Their goal is to find out the lowest price the lender will consider.

When two offers on a short sale are similar in price Cash is more attractive to the lender because there is usually no appraisal involved and no chance of losing the deal if the buyer doesn't qualify.

Still, there is a bottom number for every short sale and cash won't help lower that.

Cash helps most when there is a quick closing on a non-distressed property. I just got a client over 30% off the list price (and the list price was already lower than other properties in the community) on a Naples condo in Pelican Bay. Cash and a quick closing of just 2 weeks brought the price down 30%.

On the other hand, 30% off is not the norm in Naples, Florida. Our average off list is more around 8%.

Good luck with your offers!
1 vote
Lyle Wolf, Agent, Morristown, NJ
Sun Jan 9, 2011
The national average for short sales is 81% of "market value" , however that takes into account condtion of the home. Most short sales have suffered from maintenance neglect and require repairs and updating which affects the sale price against market value of a home in already in move-in condition. The real issue is your motivation to buy that particular house and how close to the actual value the home is priced and the lender is willing to accept. The list price on a short sale could already be a good value so offering a lot less will just insure someone else gets the home.
1 vote
Centurion Re…, Agent, Orlando, FL
Sat Jan 8, 2011
I would tell you there is no set rule for this it. Sometimes agents place the list price very low just to get attention. I would almost ignore the price, have you agent do a market review to see what its worth.
1 vote
Mike Sperling, Agent, Winter Park, FL
Fri Jan 7, 2011
On a short sale, cash really has no leaverage in reducing sale price of the property. The Seller/bank is trying to get as much as they can wether cash or financed because they'll get cash at closing anyway. However, cash may speak louder to the Seller/bank, when they review offers, w/o the financing contingency and can be favored for the quicker and more reliable sale. Given all else is equal.
Get connected with an agent that can continue to help you.
Mike Sperling
1 vote
Mark LeMenag…, Agent, Lake Nona Orlando, FL
Thu Jan 6, 2011
I was with buyers yesterday who asked me if a cash offer of $145,000 would be better than a financed offer or $160,000. My answer was of course not. The seller (in this case a bank) would be more than willing to wait an extra 30 to 45 days for that much extra. Cash is an advantage over finance only when you are talking similiar offers. Cash really has very little to do with the price you will pay. In general you will pay list price or more for a bank owned property. On a short sale, no matter what you agree with the seller, their lender will ask for more.
1 vote
Ryan Smith, Agent, Murrieta, CA
Wed Jan 5, 2011
In my area, cash or not if the place is in good shape the bank wants market value on short sales. Cash may help get your offer accepted but doesn't necessarily mean your going to get a discount.

Good Luck!
Chris Blasic
1 vote
Edyta Gryc, Agent, Naperville, IL
Wed Jan 5, 2011
You should base your offer on the most recent comparable sales. This may be below, just at the listing price or above it. Have you agent help you determine the value of the property by preparing for you CMA. Because you pay cash, it does not mean that you can expect a discount.
Good luck!
1 vote
Mitch Larriv…, , Orlando, FL
Tue Jan 11, 2011
Cash means less paperwork for everyone - including you! Why? because of the obvious factor of no financing needed. Cash can also equate to a faster closing. I can't say you should expect to pay less because you are paying cash, but you can always place a low offer with the promise of a fast closing (fast payment). This may entice the bank to jump on the deal. However, sometimes cash and a fast closing doesn't make any difference in the world, but it's worth a try. And always remember the #1 rule of negotiation -always be willing to walk away from a deal.
0 votes
Mike Luzzo, , Orlando, FL
Mon Jan 10, 2011
Hi Clouded, Cash is king as the saying goes, but in real estate it at times does not equate to a discount.

Your question is specific to a short sale. Short sales are mitigations of loan defaults and a process of a BPO being considered from the servicing lender, takes priority. A servicing lender (bank) will usually consider and approve a short sale if they are netting 88% of fair market value.

So, get with your agent, do the math and start writing.

V – when you get a chance please update all taxes on MLS listings to 2010 taxes.

Thank you
Need More Information? Please visit us @ http://topvaluesinorlando.com/

Mike Luzzo
Charles Rutenberg Realty
933 Lee Road, Suite 300
Orlando, FL 32810
Office: (407) 622-2122
Cell: (407) 222-4545
Fax: 407-442-0615
0 votes
Lisa Jones, Agent, Mount Dora, FL
Sun Jan 9, 2011
If you are offering cash on a short sale, or any home for that matter, you need to make a market value offer, that is if you want the house. Your agent can put together a market report similar to what we put together for a seller to recommend and support list price. The short sale lender will order a BPO using the same information to base their acceptance.
As an agent who lists and sells short sales, I set list price on a home as close to market as possible but keep in mind the bank has the final say.
The major benefit of cash is you may be in a better position because you are not dependent upon a lender's appraisal as you would be with a loan. This can add more time to a closing if the appraisal comes in low for the buyer's loan.
However, the short sale lender will have a bottom line and they don't care if you are cash or financing as long as they get what they want to net at closing.
0 votes
Christopher…, Agent, Tarrytown, NY
Sat Jan 8, 2011
Hi, I think having no expectations is a better way to look at it. Every seller is different, some may not budge whether its cash or financing. It will really depend on their motivation and sensibility. Cash is definitely king and cuts out the most stressful part of a transaction.

Christopher Pagli
Licensed Associate Broker
Accredited Buyer Representative
GREEN Designated Agent
William Raveis Legends Realty Group
0 votes
Jeramie Vaine, , Orlando, FL
Sat Jan 8, 2011
Great question, cash can be king in this market typically because of its ability to close quicker than financing.

Regarding offer price, have your agent get you the most up to date market trends. There are also some other tricks to getting a great price approved on a short sale that your agent should do for you!

Keep in mind, no agent makes the price the market does, if your agent is not getting you the information on the market trends or giving you the proper advice on closing short sales, contact me and I'll get you the most up to date stats for the area.

Good luck with your search, I hope this helps!

Jeramie Vaine
Web Reference:  http://www.jeramievaine.com
0 votes
Tribeca NW, Agent, Issaquah, WA
Thu Jan 6, 2011
It really all depends. Just because it is a short sale, that does not mean the seller's lien holders will give the house away. The Sellers lien holder will look at a net dollar amount and that number is anywhere between 80-90% of the current market value. The only real way to get a great deal on a short sale is if is a high dollar home or the home is need of a lot work. It is always to your benefit to have your Realtor do a market analysis to determine if the home you are interested in is priced appropriately and so you are not wasting time.

Having done a few short sales, I would tell you not to put your best offer forward but be within reason. Be prepared for the lender to counter your offer and dont hold your breath. If you are set on purchasing a Short Sale, I would suggest watching Short Sales that are currently in Pending Status because chances are that by the time the lender gets back to the buyer with a counter offer, the buyer could be gone and/or maybe they had already put their best foot forward.

Good Luck!!
0 votes
John Juarez, Agent, Fremont, CA
Thu Jan 6, 2011
Often you will pay more that 100% of the asking price for a short sale property. Short sales are often underpriced since the seller must obtain an offer in order to send the package to the lender for evaluation. The less you offer, the more likely the lender will eventually counter you to a higher price. At the end, the lender expects to get market value for the house.
Sit down with a Realtor who knows the market and who is experienced with short sales. An intelligent offer is better for you than a low-ball offer that does not make sense.
0 votes
Melissa Bark…, Agent, Washington, DC
Thu Jan 6, 2011
It all depends on the other terms of your offer. By having cash you can put down a bigger earnest money deposit, which sellers like to see and helps your contract, but at the end of the day the seller will get cash, either from the buyers mortgage or the buyer putting down cash.

For a short sale, that is dependent on the bank and what price they are willing to accept.

Good luck
0 votes
Alma Kee, Agent, Tampa, FL
Thu Jan 6, 2011
Hi Clouded,

On short sales the price is normally not preapproved so there is no certainty you can buy it even at the full asking price. Often short sale listings are priced too low and after the lender does their appraisal they will come back with a much higher counteroffer to the buyer. Short Sales are not usually the best bargains, Bank REOs are.

Cash may help you buy a short sale where the listing agent and an insider investor may be engaging in fraud. What they do is send ficticious repair estimates to the lender with the hopes that the insider can buy it well below market. Then they flip it to you for the highest possible price. Financed offers may not be able to buy a "flip" property because the lender wants to see a seasoned title.

On a Bank owned property you may have an advantage over financed buyers if there are condition issues that may prevent a sale. You need an agent to help you with REOs because you MUST get out to the property the same day it comes on the market and make your offer the same day or you will miss the best deals.

Hope this helps.
0 votes
Jim McCowan, Agent, Arlington, VA
Thu Jan 6, 2011
Paying cash won't make that much of a difference to a bank as far as an offer goes. Like anyone else, the bottom line is what's important!
0 votes
Joyce & Mike…, Agent, Orlando, FL
Thu Jan 6, 2011
Dear Clouded1118,
In most transactions, it's all about the bottom line. Which offer is going to net the Seller the most money and in how much time are considerations for the Seller. An offer depends on several factors, including what the list price is, what the property condition is and what the comparable sales have been in recent months. Call a Realtor!
Best regards,
0 votes
Gerard Dunn, Agent, Chevy Chase, MD
Thu Jan 6, 2011
Percentage? All depends upon where you start...right?

Cash is no advantage to the seller. Whether financed or cash sale - the seller still gets cash at settlement.

Cash is King - yes.......but does not offer a sizable discount or advantage over a qualified buyer financing a purchase.

Good Luck!

Gerry Dunn
Associate Broker
Serving Maryland, D.C. and Northern Virginia
0 votes
Tom Priester, Agent, Tequesta, FL
Thu Jan 6, 2011

Any seller is going to evaluate each offer and the terms carefully to determine if they would like to move forward to a bilateral contract. Cash is king as these days the underwriting process is becoming more stringent. That being said a solid financed offer will still be cash to the seller at the closing table.

Each property needs to be evaluated on it's own merit and a determination made as to an offer that is in line with it's current market value. Some properties may be overpriced and an offer significantly under the list price is valid but the reasoning behind that offer should be submitted to the seller. You will find many short sales that are listed under market value; kind of a "teaser price" so the listing agent can get negotiations started with the lender or lenders. You have to take the list price of any short sale with a grain of salt (some you might even need that lime and a shot of tequila) and contracts are contingent on lender approval after they complete their own valuation.

A qualified Realtor® is your best bet and will be able to provide you complete information on any property. A few recommendations I would make; I would tell you to not sign a buyer's broker agreement with anyone. This is a form an agent will use to tie you up and ensure any transaction you make will only be through them. Find an agent who is happy to perform their services with the knowledge that if they do not properly meet your expectations they will lose your business. Second, do not call a listing agent about a home they have listed as their initial relationship with the seller will prevent you from working out the best deal. Finally, I would recommend that you interview at least three qualified agents to assist you and select one who you feel will have your best interests as their primary goal. I work almost entirely as a buyers agent in Palm Beach and Martin Counties and certainly would be honored to be on your list if your search brings you to this area. If you are bound for Orlando I have fantastic relationships and would be happy to help you define your goals and point you in the right direction with the referral of an agent who will take very good care of you.

I hope this information is helpful but if you need anything additional please do not hesitate to give me a call.

Always at Your Service,

Tom Priester e-PRO
"Results Driven Real Estate"

Keller Williams Realty
561 308-0175
Web Reference:  http://www.tompriester.com
0 votes
Dan Tabit, Agent, Issaquah, WA
Wed Jan 5, 2011
Cash can help, but to a seller it's all cash in the end. A finance offer with a substantial down payment and good earnest money will be just as strong, so be careful to listen to the previous posters. Get a competent CMA produced by an agent knowledgeable in the area you are buying and make an offer you are willing to live or die with.
0 votes
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