Home Buying in Fremont>Question Details

mitul, Home Buyer in Fremont, CA

Is it true, if I pay whole amount by cash for any property it will be cheaper for me vs by loan?

Asked by mitul, Fremont, CA Wed Dec 11, 2013

I have heard multiple instance where cash buyers got house at up to $50000 discount and seller give first priority? if its true, why? I mean seller is anyhow going to get full money cash or loan

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Yes, because it is faster and people would wanna close 30 days sooner for $50,000 dollars less, if you have a motivated seller. Also, you wouldn't have to pay interest on a loan, but there is the opportunity cost of having your money invested elsewhere, which you should take into consideration. If you need a loan hard money or conventional though, contact me and I will get it done for you, or lead you the way to getting it done. My name is Yanni Raz, and you can email me at yanniraz@yahoo.com or call me. My number is 310 619 5557.
0 votes Thank Flag Link Thu Jan 2, 2014
Cash buyers are certainly attractive to Sellers, but your discount, if any, will vary dependent upon the Sellers needs, and other interested Buyers.
0 votes Thank Flag Link Thu Jan 2, 2014
Cash is king! Sellers are not only looking to accept the hugest offer but also the most strongest offer. However, a strong offer doesn't need to be an all cash offer and could be a financed offer with stronger terms.
0 votes Thank Flag Link Sat Dec 28, 2013
Not true ... as John pointed out below, each situation varies based on the needs of the seller. Cash does not automatically mean a discount - if anything, in the current market, it means you can actually go higher to win the bid than a buyer with a loan because you will not need to worry about an appraisal. There is one guaranteed saving - closing costs for cash transactions are substantially lower than for transactions with loans. Most sellers understand that no matter how the property is paid for (cash vs. loan), they end up with cash at the end - and most sellers are willing to wait a few extra days if a buyer with a loan comes in at a higher price.
0 votes Thank Flag Link Tue Dec 17, 2013

Let me tell you about two transactions that I had this year. I was the agent for the seller on both transactions.

One seller turned down an additional $10,000 from a buyer who needed to finance the purchase and she took a cash offer. Ten thousand dollars is a significant amount of money but it was less than 1% of the total price paid. The seller needed to close within a certain time frame and felt more comfortable with the cash offer.

Another seller turned down a cash offer in order to accept an offer that needed to be financed but was $20,000 higher. The sale closed without a problem resulting in a very happy seller.

Cash is King but the King does not always win the battle. A Prince with a larger army (more dollars) can defeat the King.
0 votes Thank Flag Link Thu Dec 12, 2013
I like the Analogy. Good answer.

Meena Gujral
Flag Thu Dec 12, 2013
Don't always believe everything you hear or read. Cash is something banks love because they know that there will not be any appraisal issues from the buyer. They will typically take a cash offer that is lower because they feel it will be an easier transaction. Plus, in many cases, a buyer can close in less than 2 weeks whereas a mortgage takes a minimum of 30 days or so to get funded.
0 votes Thank Flag Link Thu Dec 12, 2013
in a competitive offer situation in a seller's market, all else being equal cash usually wins because there are no contingencies on financing. However, whether cash or loan the seller gets the same amount and they aren't going to fire sale the property to save some time.
0 votes Thank Flag Link Thu Dec 12, 2013
Sounds like you got your answer.

Most all sellers are looking at the bottom line - who has the highest offer price will get the property. And these answers are coming from all over the country. A good, clean offer will always have the best chance of winning the bidding wars.

good luck.
0 votes Thank Flag Link Thu Dec 12, 2013
Not right now, a while back when it was harder to get a loan and buyers were scarce this was true. It was more about the buyers ability to complete the transaction. Now that lenders are letting the loans flow a little more easily and qualified buyers are more common....the sellers don't care, it's all cash to them either way.

J.R. Thrasher
0 votes Thank Flag Link Thu Dec 12, 2013
All of the loans I closed this year the seller wanted cash, not bananas. Why would the source of funds make any difference to the seller? The lender’s money spends just as easily as yours and it is easier to document we have the money. There is nothing mystical about being a cash buyer, your friend that got a discount would have gotten a discount even if they borrowed the money.

But hey, forget I deal with sellers every day, pretend the tables are reversed. If you were selling a home would you care if the buyer wrote a check, paid in hundred dollar bills or brought certified funds from their bank? Would you give your house away just because they didn’t borrow any money to close the deal? I wouldn’t, in fact I wouldn’t care if they paid me in euros or yen as long as I got what it was worth. Good luck,

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
I answer questions about financing real estate based on my decades of experience dealing with mortgage underwriters. This answer is my personal opinion, has not been reviewed or approved by the company I work for. I do not offer legal or tax advice, if you need answers from an attorney or CPA find one knowledgeable in your local market.
Web Reference: http://jamessimms.com/
0 votes Thank Flag Link Thu Dec 12, 2013
Well of course!
If you buy the home via cash...you AVOID a mountain of closing costs and financial expenses.
And the seller knows that.
If the home is priced BELOW market value and your offer reflects your expectation of a $50,000 discount...YOU WILL LOSE! No sale.
If the house is priced market value, and your purchase funds are not vetted, (i.e. you are an 'investor type' attempting an assignment) your 'CASH OFFER can be viewed for the bogus offer that it is.
If the house is priced above market value and you offer CASH over list,,,sight unseen...the seller knows there will be a price beat down coming soon. Sellers should know 'too good to be true' has real teeth.
As you may be able to recognize....CASH...is not the key to the kingdom you think it is. I can turn a pauper into a cash buyer. A seller knows this.
So, your observation, 'seller is going to get full money anyway' is correct. At the closing table IT IS ALL CASH to the seller.
A cash offer can be made more appealing to a buyer....very appealing,
Consult your real estate professional to construct your purchase offer to reflect the greatest 'VALUE' to the seller. Purchase price, although important, is not the only important factor, and, because of the issues previously mentioned...price may not be the most important factor.
Be aware, the seller understands that a cash offer means that Wells Fargo, Bank of America or Chase will not become an uninvited participant in the negotiations via their fiat appraisals. That has value!
Consult with your REALTOR to discuss the REAL value a cash offer presents (it's not a discount to you) and leverage this to your advantage.
0 votes Thank Flag Link Thu Dec 12, 2013
Cash buyer only get advantage if one buyer financed and other buyer offer cash at the same price point but hardly see more than 1% discount.I hope this helps!!!!
Web Reference: http://www.joepatel.com
0 votes Thank Flag Link Thu Dec 12, 2013
Hi Mitul,

There are lots of instances where cash buyers get discounts, but it also depends on where the home is priced. If it's listed for $1M, then $50K isn't out of the ordinary. Sellers are not going to discount their homes deeply if they're getting their money one way or the other: cash or mortgage. It's true that many homeowners would rather have a cash transaction because they are usually much faster and able to close once title is cleared. No waiting for mortgage processing and stipulations.


Scott Miller
Realty Associates
Boca Raton, FL
0 votes Thank Flag Link Thu Dec 12, 2013
Basically all sales are cash to the seller because at closing they get their money the same whether the buyer was using cash or a loan so when you see a home close for less than the comps, the 'discount' is usually because there are issues with the home and depending on those issues it may make it difficult to get financing so sellers of those homes will favor a cash offer. Desirable homes are unlikely to sell below market value because those sellers will receive multiple offers. When a market is very active I have also seen cash buyers actually drive the prices up because they can purchase with out the worry of a low appraisal and they are happy to do it so they get their offer accepted.
0 votes Thank Flag Link Wed Dec 11, 2013
HI Mitul,

In today's lending environment, there is no guarantee that a buyer will secure financing. Several factors can affect the financing and result in the financing to fall through. Some sellers would rather accept a discounted price to assure that nothing will go wrong throughout the process.

Cash transactions close very quickly and can be attractive to sellers who are looking to move soon.


Bryan Mecsey
Amerifirst Financial Inc.
NMLS: 861229
0 votes Thank Flag Link Wed Dec 11, 2013
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