I've heard some people say that they recommend going 5-10% lower than asking price when making a cash offer. Should an offer be different depending on whether it's cash or financed?

Plenty of opinion, but one thing I've learned buying houses is you can't say the wrong thing to a truly motivated seller but you can say plenty of wrong things to someone how is kinda are minimally motivated

This. All cash offers with minimal contingencies and a slight discount are often given more preference vs a financing conditioned offer with more contingencies. Make sure to have the cash Buyer show proof of funds and put in a decent amount for the earnest money provision.

If you're the seller or his agent do you require they verify the funds before accepting the offer?

Yes. On residential deals a bank statement or screenshot of a bank account will typically be accepted. On commercial deals they typically want to see a letter from the bank.

Why do you require proof of funds to confirm the buyer is earnest in his offer? Isn't that what the earnest money is for? If the cash buyer doesn't have the cash to close, doesn't the seller get the earnest money?

If a Buyer is indicating an all cash offer, I want to have proof that they actually have funds to close the deal. a true cash buyer shouldn't have an issue with such a demand. Earnest money is a factor to consider as well - however, just because a deal falls through after the option time has expired doesn't mean the Seller automatically gets the earnest money from the title company. It is quite easy for a Buyer to tie up the earnest money and the title company will then hold the funds until an agreement to release the funds is executed by both parties or a court has ordered the release of such funds.

true...and even if the seller does get the earnest money, time has been wasted and they're now forced to go back on the market and face having the "stigma" of falling out of contract.

No better time to sell a house than when it's a hot commodity and a new listing. You only get one shot at that so sellers have to do their best to ensure it was the highest % probability as possible.

Win At Life said:

---

Why do you require proof of funds to confirm the buyer is earnest in his offer? Isn't that what the earnest money is for? If the cash buyer doesn't have the cash to close, doesn't the seller get the earnest money?

---

Why go to rough the hassle if they have multiple offers?

AgPT06 said:

---

Closing can happen faster often and a few less closing fees, but a solid finance offer is just as good in the end as long as they are pre approved by their lender and comps are available at the offers made. Now cash is king when hot market and offers being made 20k over what it's going to appraise for. Risk lender killing a deal if appraisal doesn't come in right.

---

Contract allows buyers to get out of the deal if they don't qualify for the loan. They can also get out if the property doesn't appraise. Lenders can force seller to do certain repairs. Cash is just more likely to close without a wrench getting thrown in the middle. However, if all goes well, seller can end up with just as much from cash as from a buyer with a loan.

We just put in an offer on another rental property. All cash with no option or inspection & closing at their convenience. We did come off the list price some to cover some obvious defects that will definitely be found during inspection like active termites (!) - still, it was a very fair price with the guarantee of not coming back to them for repairs. What we offered, they got.

They went with a higher offer. Of course we don't know the details of the deal, but we were a sure, no hassle thing. The inspection report - if they hire a decent inspector - is going to be mega pages long! It was an estate where there was no disclosure - but if they have a report with issues & the deal falls thru, do they have to disclose things they now know going forward? I've always wondered about that.

Quote:

---

Legally, yes. But will they?

---

My guess is no.

Here's a question for you - what is allowed when you look at a property? Can you look in the attic, go under a pier & beam, check out the hvac prior to making an as-is, no option offer but before a contract? Especially if you are not going to hire an inspector?

When I go see a potential new home with clients, I'm willing to do all the things you mentioned. I aso think all of those are considered ok as long as you don't permanently alter the home. So maybe everything short of a pressure test on plumbing? I actually just left a showing with some clients in Houston where the people who left the house just before we walked in left the attic access pulled down, so I know they went up there. I like going in attics because you can tell a lot about a house from that point of view.

Now, regarding the psychology of an offer, sometimes its better to make an offer with no option, and sometimes its better to make a more enticing offer up front, with an inspection, knowing that you are gunna blow them up after that inspection comes back. The one that comes to mind was a recent deal I did in Clear Lake that also happened to be an estate sale. I knew the house needed a new roof and HVAC from the moment we walked up. The inspection just solidified that, and we ended up getting the house at a good price, and the sellers paid for a new roof and HVAC system before closing.

And finally, estate sales are a beast of their own kind. Kind of like nice divorce sales but nicer. Remember that you are negotiating with multiple people who sometimes have different goals, and the more decision makers that get added to the mix, the more complicated the negotiations can become.

I think we lost this one because the seller drove by & she & her agent went absolutely batpoo crazy because we were looking at everything, testing the 20+ year old hvac system,etc. The agent came and confronted us & said we could not do an inspection without a contract. It wasn't an inspection, in our opinion we were doing our due diligence prior to making our "best & final" that she requested. Nothing was moved or damaged in any way. She was yelling at our agent & us in the front yard - making no attempt to ratchet it down for the benefit of her seller. Weird & will definitely color our opinion of looking at any of their listings in the future. That sucks for them - we buy & are easy to deal with.

There was no way that agent was going to let her client to go with our offer after that.

We thought we were doing everyone a favor - the estate is one heir deal that we were told did not know anything about the property or want to do anything to it. I would have thought that our offer was great.

What do you mean by testing the HVAC system from the outside?

I'm not sure what he did besides just look at it, but he said it was all working - just old & probably a bit undersized. He saw that a hard start capacitor had been added.

This won't happen again as we did not realize it was a problem. We won't be doing any no option period/as-is offers any more though even in a multi-offer situation. Honestly thought it was a good, fair thing for the seller. Live & learn.

Gotcha. From my perspective if they were just looking at the unit for taking temperature differentials then yeah that reaction was not warranted. But if they had the condenser in 15 pieces and the seller drove by then yeah I'd be pissed too.

It was a simple look. He confirmed what we thought - it was old & near the end of it's life.

Thanks for your input, appreciate it.

I don't think you're in the wrong for that at all.

agree with this completely

I think an "all cash" offer is going to be more valuable in the hot markets when you have homes going in Loudoun County virginia in a few hours.

now in this economy- I don't think it matter that much as banks are pretty desperate to be making at least some mortgages as the sales have gone over a cliff

I would rather use the cash to invest than to buy down more on the principal, but that's just my investment style

that's crazy. Seems like they were angry and themselves and decided to project on to you all.

One thing I don't miss about residential RE as my main income source is how emotional folks can get.

I sold my house in November on an a cash offer. It didn't really matter that it was cash, it was the right offer for me to take. But it didn't move the close up, and 3 weeks into the process I get an assignment letter that I needed to sign because the "buyer" made the cash offer to me, then assigned it to her daughter, who was taking out a mortgage on the house. In the end it didn't matter, we closed on time,. but I was a little miffed that they did that.

Just FYI, tricks played on cash offers.

mts6175 said:

---

I sold my house in November on an a cash offer. It didn't really matter that it was cash, it was the right offer for me to take. But it didn't move the close up, and 3 weeks into the process I get an assignment letter that I needed to sign because the "buyer" made the cash offer to me, then assigned it to her daughter, who was taking out a mortgage on the house. In the end it didn't matter, we closed on time,. but I was a little miffed that they did that.
Just FYI, tricks played on cash offers.

---

You're right, people can be tricky. I think you probably could have terminated the contract because although assigning the contract was probably acceptable but changing from cash to loan should require a new contract. However, you were already deep in the deal by then.

Alpha Texan said:

---

I've heard some people say that they recommend going 5-10% lower than asking price when making a cash offer. Should an offer be different depending on whether it's cash or financed?

---

I'm making 30-50% offers everyday. Just closed on two units that were listed for 170k at 85k. Cut deep. You'll be surprised at what will happen.

LoneStarBQ said:

---

mts6175 said:

---

I sold my house in November on an a cash offer. It didn't really matter that it was cash, it was the right offer for me to take. But it didn't move the close up, and 3 weeks into the process I get an assignment letter that I needed to sign because the "buyer" made the cash offer to me, then assigned it to her daughter, who was taking out a mortgage on the house. In the end it didn't matter, we closed on time,. but I was a little miffed that they did that.
Just FYI, tricks played on cash offers.

---

You're right, people can be tricky. I think you probably could have terminated the contract because although assigning the contract was probably acceptable but changing from cash to loan should require a new contract. However, you were already deep in the deal by then.

---

Couldn't you have terminated the deal and kept their earnest money? Sounds they purposely circumvented rules meant to protect you and make informed decisions.