Will paying cash get you a discount on real estate?

The majority of the time if you pay cash for Spring Texas real estate you will get a discount. The real question is not will you get a discount but how big of a discount.  The answer depends on how big of an advantage cash is to the seller.

paying cash for Spring Texas homesThe biggest discounts for cash will be on properties that are not available to be financed.  Properties unavailable for financing are typically foreclosure properties that are in terrible condition. The owners (banks) of these properties know they need to provide significant discounts to attract the cash buyers.

The discount will depend upon the overall condition of the property, how long the property has been on the bank’s books, and how motivated the bank is to dump the property. In the Spring Texas area, I have seen lenders sell cash only properties at 10% to 20% lower than market value.

The value of cash to a seller (bank or individual owner) is much less if the house can be financed.  Why?  From the seller’s perspective he wants to sell his home to whomever will pay him the most for it.  Whether the money comes from the buyer directly or whether it comes from the buyer’s lender doesn’t matter to the seller.  Its all cash to the seller.

A cash buyer does offer the seller some advantages including a quicker close, the elimination of potential appraisal issues, and  an assurance the transaction will not fall through due to a buyer’s inability to secure financing.  In situations where the seller has two buyers both offering him the same price for his Spring Texas house and one buyer has cash and other buyer requires financing, the seller will choose the cash buyer.

If the seller has only one offer and it is from a cash buyer, the seller is going to consider the advantages the cash buyer offers in conjunction with the market value of his house.  Sellers will give a cash buyer a discount but the discount is usually in the 1% to 5% range.

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