Realtor says cash offer doesn't matter.

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Realtor says cash offer doesn't matter.

Jacob Stokes
Rental Property Investor · Galesburg, IL · Member since 2016 · 13 posts · 37 votes

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.

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Bruce Lynn
Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
5y

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.

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  • Joe Edwards
    Investor · Northern New Jersey · Member since 2020 · 94 posts · 96 votes
    5y

    @Jacob Stokes

    Sounds like you have a delusional seller on your hands.

    In this case heres how I would handle it and this will make everyone happy.

    1- Take the cash offer off the table. Make a offer that allows you the right to close cash or traditional financing

    2- Your new offer will have every contingency included. Appraisal, inspections, environmental and sewer line. These will all be discussed and negotiated after reports are issued in review.

    3- Make your offer ask or close to ask given that you have all the contingency included in the item 2. This offer will make both (greedy) realtors happy because no matter if you given credits or not the commission is paid out on the accepted price offer.

    4- With the contingency in place, the realtors getting there commission you now become the unreasonable buyer for your mom once you get the reports back so you get your credits and land close to where you want to be. This will put you in the driver's seat because you have the deal locked up. They sellers will miss some of the hot market if it indeed is a hot market there. The (greedy) realtors should go to bat for you because the house has been sitting 168 days and they are getting there commission so they just want it done.

    I use this process quite a bit when I have sellers that are emotion, delusional or in trust where all the kids are fighting for as much money as possible but have no interest in wasting any of there time dealing with the property because they are all out of state. Its extremely effective. I have received larger credits saving me more money then my original cash offer ibwas going to submit. People tend to wake up when the reports speak of the issues and not the agents.

    Good luck! Let me know if you give this a shot and you have success with it

    5Reply
  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    5y

    @Jacob Stokes - I am an agent and investor.  98% of the time, financing goes through.  I sold 14 properties in my portfolio recently, cash offers were not a big deal to me.  If there was a higher offer and financing I took that one, depending on the difference.  I would not take an offer just because it was cash

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  • Langston Carr
    Realtor · Little Rock, AR · Member since 2019 · 17 posts · 6 votes
    5y

    @Jacob Stokes more beneficial, yes, but ultimately rather cash or financing, the money still hits their bank account unless something falls through, which while this does happen, its not as often as people would like to assume. I am both a realtor and an investor and we're talking waiting roughly 2 additional weeks to close by financing vs. closing with cash. I'd personally take the higher/better offer. Is the home FHA approved?

    2Reply
  • Ola Dantis
    Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
    5y

    Anytime I see CASH and DOESN'T MATTER, I instantly know someone is not telling me the truth or distorting the truth. 

    Time to get a new agent, I'd say!

    3Reply
  • Frank Chin
    Investor · Bayside, NY · Member since 2017 · 1k+ posts · 1k+ votes
    5y
    Originally posted by @Erik B.:

    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


    Yes, there's plenty of buyers and seller that are complete jerks. The bottom line is, can you have fun dealing with them and even come out ahead.

    There's a property a block away from my mother in laws place and we used to visit her monthly. It's seems every year there's a For Sale by Owner sign outside. Finally, out of curiosity I asked my MIL what's going on and I was told each year, he would ask too much, no buyers, then takes it off the market and do it again the next year, asking too much. At that point, he did it for about five years. Bottom line, he's not in a hurry to sell. Then again, some sellers and buyers think they're always right, no matter, and I did some good deals because of that.

    Found a property for sale, about $50K to $70K below market, a $220K property selling for $160K, advertised in the papers, being sold by a RE agent. Called the agent, showed me the property, I put in an offer for $150K to see what happens. Asked the agent if there's anything wrong with it, and was told, NO, the seller is a jerk, insisted he's right and she's wrong. She told him the property is worth at least $200K and he didn't believe me. But I get my commission anyway whether he believes me or not.

    Long story, I bought the property after the agent caught him making a deal with a buyer she bought over by the agent by cutting her out, says he changed his mind, not selling it, wait a few months for the agent's exclusive contract to expire, then consummate the deal. Unfortunately, he was talking to that buyers on his front lawn, the agent coincidentally bought us over, and saw them. After the showing, the agent questioned the other buyer who admitted what they were doing. The agent, being a strong German lady then called the seller, demanded that he accepts our offer, or she's going to kick his *** for pulling something like that on her. He accepted our offer that night.

    A funny coda to this story was at the closing, his attorney forgot to include heating oil, a tankful worth $200.00. I was going to pay it when he called, and my wife was annoyed with a bunch of things wrong with the property and his attitude so I declined. He decided to sue us in small claims, and I said go ahead. The sales contract had a clause that buyer or seller can pursue errors and omissions after closing, So I reviewed the closing documents where I found a ton of omissions in my favor. The judge opened the case and he stated a tank of oil was omitted. I said, "that's right, his attorney left it off, but he stayed 3 weeks after closing and the contract calls for his paying a pro rata share of utilities, and when I took the tank reading when he left, there's only $100 left" So the judge said, "so you owe him $100". I said "NO, he still owes me for a bunch of stuff, about a dozen". When I got up the 8th item, which at that point took a while, the judge blew up, and said "are we going to redo the closing here tonight"? He looked at the seller and said "I see you sold the property for $150K, how much did you bought it for". He said "$50K ten year ago". The angry judge yelled at him saying "you made $100K and you're wasting everyone's time tonight for $100, now get get out of here." The judge banged his gavel and everyone in the courtroom clapped. 

    So I agree, not I buyers and sellers are logical.

    1Reply
  • Ken Naim
    Investor · Lake Worth, FL · Member since 2016 · 233 posts · 140 votes
    5y

    @Jacob Stokes Hi Jacob, in a sellers market like in my area at the moment, cash doesn't mean much as there are many qualified buyers, closings ate happing quickly and few buyers are having their loans rejected due to lax standards returning. Also certain neighborhoods cash is more regular or almost standard like 55+ neighborhoods in my area.

    Sometimes cash has worked against me as the seller thinks if you have that much cash you can pay more.

    If this was a buyers market it would be very different.

    0Reply
  • Ken Naim
    Investor · Lake Worth, FL · Member since 2016 · 233 posts · 140 votes
    5y

    @Jacob Stokes I've walked into showings where I'm putting together a mental list of a dozen major items that'll need work and when walking out I'll overhear another couple saying it is in move in condition.

    Not every seller or buyer sees the true condition. Some sellers may need more than 168 days to come to this realization or never.

    Some may not be truly interested to sell while others will wait for that naive buyer with a conventional loan.

    If this were aninvestment property then I'd just move on to the next one. Since it is for family and if they truly love it and they don't like anything else then it is an emotional purchase and could be worth paying a bit more.

    I bought a house for my parents and paid 30k more for it than I would have as an investor for this reason. Thier happiness was worth it.

    0Reply
  • Ray Ellen
    Realtor · Little Rock, AR · Member since 2013 · 27 posts · 13 votes
    5y

    @Jacob Stokes pro Realtor here. I’ll be brief:

    Only reasons why cash makes a diff:

    • No appraisal (for an offer over list or beating out multi offers this is key. For a “low ball” cash offer or a “lower” cash offer it doesn’t matter if the property is in good condition)

    • No “approval” necessary (assuming cash is actual liquid cash available now)

    • Close fast (does not matter and might hurt if the sellers are not in a hurry or have no where to go)

    So yea, it could make a difference but in most cases, the money gets to the seller the same way and it may not matter at all.

    2Reply
  • Langston Carr
    Realtor · Little Rock, AR · Member since 2019 · 17 posts · 6 votes
    5y
    Originally posted by @Brie Schmidt:

    @Jacob Stokes - I am an agent and investor.  98% of the time, financing goes through.  I sold 14 properties in my portfolio recently, cash offers were not a big deal to me.  If there was a higher offer and financing I took that one, depending on the difference.  I would not take an offer just because it was cash

    I absolutely agree! It’s just a 2 week waiting period. I’m an agent and investor myself and I receive cash offers on my personal properties and I chuckle sometimes because people assume because its cash I’ll take it and run. We are talking a 2 week waiting period between cash offers and financing offers. Financing doesn’t fall through as often as people assume.

    1Reply
  • Dan Maciejewski
    Realtor · PInellas County Largo, FL · Member since 2016 · 902 posts · 810 votes
    5y

    Cash is only better if you make it stand out. If you are still getting an appraisal and asking for inspection items and closing in 45 days, then there is literally no difference. If FMV is 15-20% higher and they can get it by waiting, and can afford to wait, short cash doesn't look that great. If their holding costs are $100/month, then they can wait a long time before it gets really expensive!

    If you are waiving appraisal and inspections and closing in 2 weeks, then it starts to look interesting.

    The fact that it's been 168 days says something.  Has your agent found out what it is?  It could be that it says that they are not all that motivated and only care about price.  That sounds like what your agent is saying.  

    Personally, I would probably spend the time to write the offer.  They can't counter something that doesn't exist.  I've written lowballs.  I've received lowballs that sellers have shockingly taken.  

    0Reply
  • Wale LawalBusiness Member
    Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
    5y

    Interesting!

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  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    5y

    Cash matters when they want a quick close. Cash matters when it won't finance. Cash matters when you back it with minimal inspections so they know it is not a bait and switch where you say I will pay listing and then subtract significant money after the offer based on inspections. 

    Cash doesn't matter if the offer isn't good moneywise. 

    2Reply
  • Matthew Irish-JonesBusiness Member
    Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
    5y

    @Jacob Stokes yes everyone loves cash 

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  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    5y

    @Jacob Stokes well one of two things  realtor is clueless OR the seller is not in a rush and does not really care if they sell or not. I ONLY deal with cash buyers, and will actually provide a bit of a discount to cash buyers....

    Cash "as is" close in a couple weeks or 60 days, appraisals inspections etc, Cash everyday 

    Good Luck 

    0Reply
  • Brad Fausett
    OH · Member since 2016 · 121 posts · 60 votes
    5y

    @Jacob Stokes not necessarily, I have never lost a home sale due to financing falling through and in this sellers market everyone is getting top dollar.

    I just bought a new property all cash, 8k under a fair list price but I did it with no inspection, all cash and hours after hitting the market before another showing happened.

    Once showings start it seems offers a flooding in, I personally have said no to all cash offers more then $3k less then financed offers.

    0Reply
  • Robert E BoginoPro Member
    Real Estate Agent · Alpharetta, GA · Member since 2017 · 151 posts · 76 votes
    5y

    Cash is a great offer but its definitely not a guarantee to get the deal anymore like it used to be.  I have people turn down easy cash sales all the time for above asking financed offers. 

    0Reply
  • Jonathan Tavarez
    Flipper/Rehabber · Laurel, MD · Member since 2016 · 139 posts · 109 votes
    5y

    Is all about the market you are buying in, the type of property and demand.  Here in Maryland there are a lots of areas where a cash offer wont make a difference because they can just wait for someone coming with a mortgage that can pay a higher price.  Cash offers are important when you have a motivated seller and a property that clearly needs work, turnkeys with good demand and specially in the current market conditions not so much.

    0Reply
  • George Munoz
    Real Estate Agent · Fort Lauderdale, FL · Member since 2018 · 360 posts · 213 votes
    5y

    Maybe try to put in more of the deposit and  less inspection period  and just put the offer and see whats up and follow up .. Dont say what is it that you are doing , just make the offer. and if you are Helping your parents ( send them a little video with parents and your intentions) to separate from competition .. 

    0Reply
  • Avery CarlBusiness Member
    Real Estate Agent · USA · Member since 2016 · 909 posts · 1k+ votes
    5y

    @Jacob Stokes sounds like you want to make a low offer. In the current market, cash really doesn’t matter if you’re lowballing.

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  • Greg WeikBusiness Member
    Property Manager · Denver, CO · Member since 2020 · 264 posts · 327 votes
    5y

    Where did @Jacob Stokes go?!

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  • Chinyere Orie
    Real Estate Agent · Baltimore Maryland · Member since 2019 · 98 posts · 75 votes
    5y

    She's wrong when she says the seller doesn't care about it...the type of financing is definitely a factor when a seller is accepting an offer, along with other things such as the time in escrow, the inspection contingencies, etc.  Of course, most sellers care about the bottom line, what the walk away with after closing.  But the type of financing definitely matters.

    0Reply
  • Jacob Bohrer
    Rental Property Investor · Canton, OH · Member since 2020 · 58 posts · 22 votes
    5y

    @Jacob Stokes yes absolutely cash and less contingencies matter. We sold out home and it mattered a ton. We accepted a smaller offer with less requirements and a higher down payment.

    I consider them when buying and selling personally.

    Realtor sounds like an old dog with no new tricks...

    0Reply
  • Alexander Szikla
    Real Estate Agent · New York City · Member since 2020 · 819 posts · 641 votes
    5y

    If they are confident property will appraise - seller may not be concerned about a bank pulling out. 

    Cash is certainly king, but some folks prefer to wait for their "price" and simply aren't in a rush. It is the exception, not the rule but it happens. 

    0Reply
  • Casey C.
    Rental Property Investor · IN · Member since 2020 · 46 posts · 41 votes
    5y

    @Jacob Stokes Fire your realtor immediately and hire someone else. Make sure you get a release if u signed to buy with that agent. That agent sounds terrible. You need a good realtor you can trust that works for you! Cut bait and walk away from that realtor.

    0Reply
  • Gillian Gong
    Rental Property Investor · Boston, MA · Member since 2019 · 5 posts · 4 votes
    5y

    @Jacob Stokes

    I have been making cash offer over listing price in past few months and still got outbid. The market is literally crazy now.Following this thread cause I’m also wondering if cash offer really had lost its advantage.

    1Reply
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