How much of a discount do cash buyers expect?
Dear Phyllis,
I am the trustee for my grandmother, who recently passed away. I will be listing her home in San Diego. We had an estate sale and the home is now vacant. With her illness and then the paperwork with the attorney this has been a long process and I am hoping for a quick sale. If we find a cash buyer do you think they will expect a cash buyer discount? Gina
Dear Gina,
I am sorry for your loss. And I understand that you want this to be done as quickly as possible. I don’t sell real estate in San Diego and am not familiar with their real estate market. However, in our current Los Angeles market cash buyers don’t typically get much of a discount. Other than luxury real estate, most homes are selling in multiple offers for over asking price.
Serious home buyers are writing strong offers. Some even waive loan and appraisal contingencies. Cash buyers do have the advantage of being able to close quickly, while most lenders need about thirty days.
Qualifying for a mortgage is not the obstacle it was five years ago. Prior to accepting an offer, your listing agent should call the buyer’s lender. Your Realtor needs to ensure that there won’t be any problems with obtaining a loan.
Once your real estate agent has done their due diligence, the only financing issue should just be the appraisal. Your agent will likely provide comparable listings and sales for the appraiser to validate your selling price. Your Realtor should have an indication if this is going to be a problem. Assuming you receive more than one offer, if your agent believes your Grandma’s home will not appraise there are several strategies:
You may ask the buyer to waive their appraisal contingency:
Or you might request that the buyer agree that the property appraise for a minimum amount. For example, the home sold for $1,000,000 and the buyer agrees that he will complete the purchase as long as the home appraises for at least $950,000. If the home appraises for less the buyer may cancel escrow or more likely try to negotiate the difference.
Home buyers are writing very strong offers and therefore in our competitive market a cash buyer is a bonus but a cash buyer discount is not worth tens of thousands of dollars.
