Realtor says cash offer doesn't matter.
Rental Property Investor · Galesburg, IL · Member since 2016 · 13 posts · 37 votes
Realtor says cash offer doesn't matter.
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Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
5yI always say flip it around as if you were the seller...would you rather have $100,000 financed offer or $85,000 cash offer? Everyone is different. I have had more trouble with cash offers than with financed offers. After 20 years I've had more cash offers go dark and walk away than financed offers. Now if they were for the same amounts and I can verify certain things, then of course I would rather have cash. One thing for me is that I can have some comfort with financed offers is I can follow the progress. Has lender ordered title, have they ordered appraisal, has the appraisal come in, did it make value, have they sent closing docs to title.....with cash, I'm just sitting on the sidelines wondering if buyer is going to show up on closing day?
I think you should listen to your agent, but they should also listen to you too and follow your directions. If you want to make a low offer and make it for cash, they should follow your wishes.
What's the price of the house? What do you want to offer? What's the market like where you are? What is the value of the house? Is it priced to sell or is it over priced? What are the repairs you think are needed? Are homes in your area selling at list, over list, below list? Where are you in that mix? Are most offers cash or financed?
Also when you say cash....is that cash cash, like money in the bank cash...or are you using hard money? Hard money or private money is not the same as cash.
101 Replies
- Investor · Columbus, OH · Member since 2017 · 861 posts · 1k+ votes5y
Originally posted by @Jacob Stokes:
Hey guys and gals,
I am helping my parents find a house and we have found one with a real estate agent from the area. So, I was going over the offer we would like to make with her this morning and she told me "Cash" offer doesn't really matter. The seller doesn't care about that. Now to me that can't be right, don't banks/financing back out of deals all the time? Also tried telling her to put in certain terms to make it more appealing to the seller, like inspection amounts that we will cover if somethings wrong and won't back out but she said she has 40 years of experience and that doesn't matter either. Any advice will help. Thanks.
If its the listing agent, she might know firsthand the seller truly doesn't care, and is motivated only to maximize their cash out.
If you are sending them a lowball offer on a new listing and this is your agent, she might be trying to guide you away from lowballing in the current market. However if this is your agent and she isn't sending your offers the way you want them written, go find an agent that will represent you.
- Rental Property Investor · Galesburg, IL · Member since 2016 · 13 posts · 37 votes5y
@Nicky Reader
This our agent not the listing. It is a semi low offer, but considering that the repairs that we would cover I feel its fair. I guess my question is, isn't it more beneficial to the seller for a cash offer with less stringent inspections than a financed off with a lot of required inspections by banks/credit unions that they may back out of financing if something is found?
Originally posted by @Jacob Stokes:
@Nicky Reader
This our agent not the listing. It is a semi low offer, but considering that the repairs that we would cover I feel its fair. I guess my question is, isn't it more beneficial to the seller for a cash offer with less stringent inspections than a financed off with a lot of required inspections by banks/credit unions that they may back out of financing if something is found?
Depends on the seller’s motivation (or lack thereof). If they just want the highest sales prices, and aren’t in a hurry to sell, then maybe they don’t care if it’s a financed offer or all cash.
Realistically, once the deal closes, the seller is getting paid the same (all cash directly to their bank account) either way.
- Investor · Columbus, OH · Member since 2017 · 861 posts · 1k+ votes5y
Originally posted by @Jacob Stokes:
@Nicky Reader
This our agent not the listing. It is a semi low offer, but considering that the repairs that we would cover I feel its fair. I guess my question is, isn't it more beneficial to the seller for a cash offer with less stringent inspections than a financed off with a lot of required inspections by banks/credit unions that they may back out of financing if something is found?
You are correct, but its completely up to the seller's mindset. You could try stalking their social media to see if they are posting anything that gives insight to their mindset and motivations.
Generally buyer's agent realtors are there to close deals, so do keep that in mind. Not that they are all cold-blooded lizards, but its in their best interest to write offers that will get accepted. It's an unfortunate side effect of them not getting paid unless the deal goes through.
- Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes5y
I always say flip it around as if you were the seller...would you rather have $100,000 financed offer or $85,000 cash offer? Everyone is different. I have had more trouble with cash offers than with financed offers. After 20 years I've had more cash offers go dark and walk away than financed offers. Now if they were for the same amounts and I can verify certain things, then of course I would rather have cash. One thing for me is that I can have some comfort with financed offers is I can follow the progress. Has lender ordered title, have they ordered appraisal, has the appraisal come in, did it make value, have they sent closing docs to title.....with cash, I'm just sitting on the sidelines wondering if buyer is going to show up on closing day?
I think you should listen to your agent, but they should also listen to you too and follow your directions. If you want to make a low offer and make it for cash, they should follow your wishes.
What's the price of the house? What do you want to offer? What's the market like where you are? What is the value of the house? Is it priced to sell or is it over priced? What are the repairs you think are needed? Are homes in your area selling at list, over list, below list? Where are you in that mix? Are most offers cash or financed?
Also when you say cash....is that cash cash, like money in the bank cash...or are you using hard money? Hard money or private money is not the same as cash.
- Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes5y
Well, either way the cash at close is the same.
Maybe she means seller not willing to give a discount to a cash buyer since the market is hot?
- Rental Property Investor · Galesburg, IL · Member since 2016 · 13 posts · 37 votes5y
@Steve Morris
I understand cash is the same at closing but my point/argument is that if your house won't pass an FHA/VA inspection then how is the financing for that the same as cash? Cold hard cash I feel is better than financing.
- Rental Property Investor · Galesburg, IL · Member since 2016 · 13 posts · 37 votes5y
@Bruce Lynn
Bruce this house will not pass inspection for any type of special financing like VA or FHA due to the condition the roof is in and other things not as serious. So thats my whole angle in trying to get a better deal, is a cold hard cash in the bank offer. The listing is $129,900 it has been on the market for 168 days. We are wanting to offer $101,500 due to the roof and the deck off the back of the house would need repaired. Just felt weird and wrong for her to fight me on my way of thinking. I appreciate everybody here giving me more perspective.
- Los Angeles, CA · Member since 2018 · 86 posts · 86 votes5y
@Jacob Stokes typically if it is an on market deal off the mls and being marketed to retail buyers the goal is to maximize the sales price. If it is an off market deal you will find that cash offers and low contingencies go a long way, but it sounds like the former in your case.
- Real Estate Agent · Member since 2019 · 16 posts · 14 votes5y
@Jacob Stokes your agent should be your advocate looking out for your best interests. They should be pulling comps so you can use the data to back up your offer. They should also be able to try and see if they can get a sense of the sellers motivation by talking with the listing agent.
There are several instances where cash is king but if the seller is emotionally attached and would rather make sure that the right family gets the home then cash won’t really work.
Or the deal could be a short sale and your dealing with a bank.
Ask your agent why she feels cash won’t work for this deal.
You should have a frank conversation with your agent about your expectations. Then if nothing changes after your conversation it might be time to find another agent.
Hope this helps.
- Member since 2020 · 339 posts · 356 votes5y
In a hot market nobody is going to get excited over your 100k offer on their 130k price . The demand is still high and your probably wasting your realtors time . Cash doesn’t really matter much unless you have no contingencies or inspections . The seller gets a check or money deposited at closing either way . If your not needing financing then remove contingencies and buy it as is with a fast closing ! If your serious,Put your money where your mouth is
- 5yTheresa HarrisPro MemberMember since 2019 · 15k+ posts · 11k+ votes
In a competitive market, a cash offer can help as deals can fall through due to financing problems. It also means the possibility of a faster closing.
If this is your agent, she needs to listen to you (and you to her). If you want general things in the offer that might sweeten the deal, then she should add them within reason. I get her not wanting to put down 10 things, but the cash offer, inspection with no counter-negotiations on total repairs under $X, etc is good.
- HVAC Tech · Fort Wayne, IN · Member since 2015 · 423 posts · 223 votes5y
I feel like in this market cash offers dont have as much pull. I put in a cash offer and lost the deal to a financed offer at the exact same amount. Totally threw me for a loop. Either way if its listed on the mls, your wasting your time low balling. Best of luck.
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes5y
Originally posted by @Jacob Stokes:
@Bruce Lynn
Bruce this house will not pass inspection for any type of special financing like VA or FHA due to the condition the roof is in and other things not as serious. So thats my whole angle in trying to get a better deal, is a cold hard cash in the bank offer. The listing is $129,900 it has been on the market for 168 days. We are wanting to offer $101,500 due to the roof and the deck off the back of the house would need repaired. Just felt weird and wrong for her to fight me on my way of thinking. I appreciate everybody here giving me more perspective.
Thats 21% below list price.
Would you rather your agent lie to you and tell you something you want to hear or be honest and tell you something you dont want to hear? Sounds like the latter.
District Invest Group545 Reviews @Jacob Stokes you should just ask your realtor why she thinks that the seller doesn’t care about cash instead of trying to hypothesize. It very well could be true, some sellers don’t have the experience of a deal falling through due to a financing contingency, and some just flat out don’t care and want their magical number. The price and terms of your offer have different values to different sellers, it really depends on the context of their situation. That being said, I don’t think your offer is a lowball, it’s worth writing up, especially if it’s been on market that long.
- Investor · Pueblo West, CO · Member since 2014 · 310 posts · 213 votes5y
Originally posted by @Bruce Lynn:
I always say flip it around as if you were the seller...would you rather have $100,000 financed offer or $85,000 cash offer? Everyone is different. I have had more trouble with cash offers than with financed offers. After 20 years I've had more cash offers go dark and walk away than financed offers. Now if they were for the same amounts and I can verify certain things, then of course I would rather have cash. One thing for me is that I can have some comfort with financed offers is I can follow the progress. Has lender ordered title, have they ordered appraisal, has the appraisal come in, did it make value, have they sent closing docs to title.....with cash, I'm just sitting on the sidelines wondering if buyer is going to show up on closing day?
I think you should listen to your agent, but they should also listen to you too and follow your directions. If you want to make a low offer and make it for cash, they should follow your wishes.
What's the price of the house? What do you want to offer? What's the market like where you are? What is the value of the house? Is it priced to sell or is it over priced? What are the repairs you think are needed? Are homes in your area selling at list, over list, below list? Where are you in that mix? Are most offers cash or financed?
Also when you say cash....is that cash cash, like money in the bank cash...or are you using hard money? Hard money or private money is not the same as cash.
All things being equal, cash is better than financing. However, all things are often not equal and a cash offer is not always best.
Hey Jacob,
We just ratified on an offer represented buyers on an multiple offer situation with 17 offers - here in the San Francisco Bay Area, and we were able to beat an all cash offer with a 20% down conventional loan. We had built a great rapport with the selling agent, and she trusted that we would close compared to an all cash offer that was a little lower. We did offer with zero contingencies to be competitive in this market.
Granted your property is 168 days on the market, seemingly can get a discount, however this depends on the sellers expectations and your market situation. Your agent should have provided you with a comparable market analysis of the homes in that area to determine if the property in its current condition is worth $100k - if the comps in the area are showing around $150k, and it takes about $20k in repairs to get to where it's at, possibly the sellers are looking It is possible that the sellers have already priced in the repairs into the home which needs work. Best to have a good discussion with your agent, and the reasoning behind it. Are you coming in with an inspection contingency as well? Are there full disclosures of the property to make a non-contingent cash offer?
I'm always an advocate of helping our clients write an offer no matter how low I feel the offer is, you never know until you do. We do provide the comps for our clients to determine if the offer stands a chance. We wrote three offers this week, and 2 were not accepted. Went way above asking market is crazy over here (15 offers sold 20% above asking) another 26% above asking!! - don't think those offers will appraise, but lost to an offer that had $500k down on a $1.52M purchase.
What city is this property located in, may I ask?
Find out more information about the seller's situation. What are your intentions with the property? Fix and flip, hold long term? Maybe the house is paid for and anything less than listed is unacceptable, maybe it is an inheritance thing. If they don't like the low price then focus on terms. Maybe a full price offer with owner carry and delayed payments. Less out of pocket for you and you can refinance after repairs. The advantage to the seller with an all-cash offer is no loan contingency and a quicker close. If you already know the repairs, did you wave the contingencies? If you can't negotiate price, negotiate terms.
- Investor · Fort Lauderdale, FL · Member since 2016 · 22 posts · 15 votes5y
@Jacob Stokes, You dropped a lot of info in the post above that wasn't in the original post. In a case where it won't qualify for FHA or VA financing AND the house needs repairs AND it's been on three market a long time... OF COURSE a cash offer is going to make a BIG difference.
Tell your realtor to write the offer EXACTLY how you want it. That’s it.
If you’re wrong and the seller doesn’t like it, you can usually just increase your offer during negotiations.
I have found there are many “retail” R/E agents that don’t want to low-ball.
I have also found some excellent “investor” R/E agents that are happy to write any offer, knowing you can’t buy a property until you write an offer.
If you have to continually fight with your agent to do what you want to do, get a different agent.
People, it's been sitting for 168 days! If this market is like most in America right now then something is either very wrong with the property or the seller.
The best thing to do is ask "why". Keep asking until you get your answer.
just because you are thinking logically doesn't mean the seller is
- Real Estate Agent · Winston Salem, NC · Member since 2014 · 486 posts · 303 votes5y
@Jacob Stokes I would ask my agent to voice the benefits of your cash offer to the listing agent. Cash offers, no contingencies and a quick closing look usually good to most unless the seller isn’t really pressed on selling.
@Jacob Stokes with all else being equal, you are correct, cash, waiving inspections and shorter closing time is better. HOWEVER, every seller is motivated differently. This seller may be content with waiting for the highest offer (cash or finance).
It's also important to listen to your agent, but that doesn't mean you need to follow their advice. I would suggest telling your agent to submit the offer how you want it. The worst they can do is say no and then you reconsider your 2nd offer.
On my very first property my agent said there is NO WAY the seller will accept my offer price and a 1-year home warranty. Turns out the seller accepted the offer. That was the last time I used that agent.
- Rental Property Investor · Columbus, OH · Member since 2018 · 42 posts · 29 votes5y
@Jacob Stokes - it sounds to me that you and your agent may just be misunderstanding each other. It’s certainly possibly that cash may not matter if the price gap is large enough. Too many variables to unpack on that one, but I’d suggest you have a more in-depth conversation with he/she about offer strategies.
To address the part of your question about inspection dollar amounts. That can be a very gray area. If I’m understanding you correctly, you plan to cap the amount of repairs you would ask for. You may say you won’t request any repairs costing less than a certain amount, but who’s decides those costs? Also, is it an aggregate amount or an amount per repair? I think this type of clause can get very complicated and convoluted. Be careful using it. You may even consult an attorney about writing that type of clause... or you might stick with inspection without remedy or no inspection at all.
If I misunderstood your reasoning behind the inspection thing, then my apologies. Feel free to message me if you’d like to unpack this question more. I’m both and agent and investor so I see both sides of it.
- Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes5y
Originally posted by @Jacob Stokes:
@Steve Morris
Cold hard cash I feel is better than financing.
I feel the same way, but neither you/I are the seller. You need to understand their perspective if you want the deal to go thru (assuming their broker is speaking on their behalf accurately).
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes5y
@Jacob Stokes you are most likely misunderstanding. They are not saying a cash offer is less appealing, they are saying a cash offer at massive discount is less appealing than a better offer with financing contingency.
You are asking for a $28,000 discount to repair a roof and deck. You could replace both for $10,000.
That is great that you want to get a great deal, but cash isn't some magic power that makes people accept bad offers. Maybe this isn't the right deal or maybe you can lift the offer a little so it works for both of you. The fact that it has been on the market 168 days leads me to believe they are not super motivated. Put an offer in and if they reject it, tell them to contact you later if they change their mind.
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