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.
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.
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 didnâ€™t borrow any money to close the deal? I wouldnâ€™t, in fact I wouldnâ€™t care if they paid me in euros or yen as long as I got what it was worth. Good luck,
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.
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.
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.
Boca Raton, FL
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.
Amerifirst Financial Inc.