All-Cash Offer – Should I Offer the Buyer a Discount?
Most parts of the country are seeing a strong seller’s market. Inventory is low and buyers want to take advantage of the low interest rates. As a result, sellers may be in the enviable position of a bidding war. Some buyers believe that presenting an all-cash offer to the seller can earn them a lower price by being more attractive.
But as a seller, should you accept a lower price from a buyer just because it’s all in cash? The short answer is, “it depends.”
• Do you need to close quickly?
• What are the terms of the offer?
The best advantage of an all-cash offer is the ability to close faster than traditional financing. Typically, loan processing will take several weeks from appraisal to underwriting. A cash offer can be completed in a matter of days; the monies need to transfer and the title needs to be recorded. If it’s important for you to get the money quickly, then accepting a slightly lower sales price in return for the speed of closing could be worth the cost.
Even if the offer is all-cash, that doesn’t guarantee it will close any sooner than another buyer. The most important consideration is the terms of the offer. Even though there is no lender involved, the offer might still be contingent upon an appraisal, a home inspection, and other standard contingencies. Simply paying in cash by itself does not guarantee that the sale will close any faster than a well-qualified buyer who will use financing.
The bottom line is that before discounting your home price for an all-cash buyer, compare all the offers. Your goal is to net as much profit from the sale as possible. If the speed of closing is important, then a small discount might be warranted; but if not, consider all the terms carefully before assuming an all-cash offer is better.