Question on a cash offer, is this a good offer?

3 Replies

My friend has a townhouse with the intention of selling it a retail buyer for 285k. A cash buyer who seems like he really wants it has been behind the house last two weeks. The area is a booming for rental units. The cash buyer already owns several properties in the area. His starting offer was 255k and now several days later stands at 270k cash. He said he will go easy on the inspections (HVAC is old) and provide and delay closing until my friend finds another house to move. He is saying its a good deal since my friend don't have to pay real estate agent commision. I would like to know your thoughts, is it a good offer, should my friend accept it? Note that we don't know the retail offers yet.

$285,000 minus a 6% commission is $267,900, so that sounds reasonable. Is $285,000 the price your friend plans on listing it or is that his bottom line? That is sort of the big question, as if you think you might get substantially more than $285,000, that really changes things.

If you want a simple response: No, it's not a "good" offer.

Here's why: Your friend is not saving anything by not using an agent. My math says $285K - 5% Commission (no one should ever pay more!) equals $270,750. So already your friend is giving away $750.

Also, do not underestimate the downside: Your inexperienced friend vs. An active investor. Even without bad intentions, your friend is walking into a wolf's lair.

Proof of that is that he "will go easy on the inspection" and "delay closing." Um, ok? Sound like a nice gesture but some locales the seller isn't required to do ANY repairs. (Is New B. one of those locales? A local agent would know.) And the Closing Date is negotiated between buyer and seller, not set by just the buyer. So this offer to go easy and delay close is...unnecessary at best, a faux "kind" gesture.

The fact the offer is cash is moot if your friend needs time to find a new place and if there's mortgage to be paid off. Unless the offer tops $277K ($285K- 2.5%Commission) I wouldn't even consider selling to this buyer without agent representation given what's already been "offered".

You only need an agent if something goes wrong and then you really, really need them.

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