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. 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 Summer than it was last Winter or Fall. Your comparable sales should be current to 90 days old only.
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.
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.
I hope this helps you and if you need any help please feel free to contact me anytime.
Brian F. Walsh
REALTORÂ® ABRÂ®, BPO
Carolina One Real Estate
49 Broad St.
Charleston, SC 29401
The discount depends on the seller's position at this very moment.
Do they have any other offers? - If they do, then not much of a discount - the highest bidder will win. How long have they been "sitting" on the market? - The longer the house sits, the larger chance of a discount you'll get.
What is the local values trend - up or down? If up, the sellers won't rush (unless they have to move, which often is mentioned by their listing agent) and the discount will be slim (or nothing). If down,
then you should use that as a negotiating tool.
What kind of transaction is this - foreclosure, short sale or normal sale? - In foreclosures, there is often a bidding war (hard to get a discount). In short sales - the transaction may not even close, if the offer is too low (as some lenders do counter offers). If the normal sale - you have a biggest chance of a discount, if the seller is motivated (something to be found out).
In addition to above, other factors can help you get the desired discount.
For example, if you are ready to close quickly or not, if you'd do a quick inspection or no inspection, how much money you put as your escrow deposit (the more you put there - the more confident the seller will be about you as a buyer)...
Make sure to see that you offer is justified by recent comparable sales, regardless of cash/financing.
Best of luck!
Hope this helps,
Beachfront Realty, Inc.
Hope this helps,
When the Escrow closes, the Lender gives cash, the Seller gets cash, and the Seller's Lender gets paid off in cash.
The advantage of a CASH deal for the Buyer is that it is a stronger offer, not contingent upon getting financing in place. But the Bank sees cash.
The important part of this deal; you have omitted: What is the MARKET VALUE of the property?
If the Market Value is $85,000, then your cash has some leverage.
If the Market Value is $100,000 and you are thinking about offering $75,000, while a financing buyer is offering $100,000; which offer do you think is going to be accepted.
So don't get all excited about your cash; you may not even want to pay cash!
There are a lot of possibilities.
Cash is King, there's no question about that. How much you will pay, however depends on a great many variables including market conditions, seller's motivation, etc, etc. Get yourself a FREE real estate agent (it's free to you because the seller has already paid your agent's commission if they have a seller's agent) and work with them to establish a good offer. If you want to probe the bottom of the acceptable level for the seller, start low and see what s/he does. S/he may decide they don't want to do business with you because your offer is too low, or (more likely) they will counter and then you're on your way to agreeing on a price. Best of luck with your cash purchase...Jim