You know that old saying “Cash is King”? Well, that rings true today. In Arlington County, cash sales account for about 20-25% of all sales. There are many advantages to a seller of a cash offer, as well as numerous negotiation advantages to a buyer. Let’s discuss a few, and a few things that may complicate the offer unnecessarily:
1. Sale Price and Credits
When you’re talking about a sale price, it’s all inclusive. You agree to pay your own closing costs, which will be minimal in a cash deal. There’s no real reason to ask for a subsidy because it’s just the net dollar amount you’re talking about. So if you’re buying a $500k house, and closing costs might be $5k, there’s no reason to say $500k with a $5k subsidy – in that case, just offer $495k and keep it clean and simple.
2. Contingencies
Depending on where the cash is coming from, you’ll likely not need a financing contingency (if you’re taking cash for a sale of a property, you may need a settlement contingency or home sale, but financing is what we use when we think of banks and mortgages). You will likely still have a home inspection/radon/termite, and you can choose to get an appraisal if you wish. If you’re buying a property located within a condo or HOA, you’ll also have the 3 day review period.
3. Closing Date
Depending on how liquid your assets are and the situation of a seller, you may be able to close as quickly as you can transfer the cash to the settlement agent (title company or attorney). Of course, if a seller has nowhere yet to go, you may be subject to their schedule. But a fast close is usually an attractive point for a seller.
Remember, there are many advantages, but in our market it is hard to get a “steal.” Just because you’re paying cash, doesn’t mean you’ll get a 10% discount over someone offering the same thing with a mortgage. Your offer is just less risky to a seller, and there may be some amount of money that will make it worth taking a cash offer over a financing offer; it’s just hard to say what that delta will be because every seller and every situation is different.