Recently a client asked on average how much of a discount homebuyers can get who are paying all cash.
Everything in real estate can vary widely by location, the type of home, and the price range, so to give the most well informed answer we have to focus on a narrow portion of the market. This client was looking specifically in Mesa, Gilbert, Chandler, and AJ for single family homes at $180,000 or less.
Looking into sales records, there were 254 out of 700 homes that were listed between $150,000 to $180,000 sold to all cash buyers over last 3 months …with an average sold to list price percentage of 100% (EVEN despite being cash), with the extreme discount end being a house listed at $150,000 sold for $137,000 and a high end of the spectrum being a house listed at $180,000 and sold for $225,000. So there is quite a wide spectrum for what even a cash buyer has to pay to win the bid on a house, but by and large these days most homes will go for full asking price even with cash offers, assuming they are priced appropriately to start.
Cash is still king…but in contrast to a couple years ago where you could get a discount on market price by using cash, these days using cash is more of a tool in getting your offer accepted over several other buyers that are using financing. Many homes are getting multiple offers as soon as they are listed, and cash will always be the most attractive. With many homes selling to cash buyers at full asking price, those buyers using financing are sometimes having to offer well over asking price just to get the seller’s attention and stand a chance.
The biggest factor in this market influencing how much of a discount or over asking price you need to offer will be dependent on how well the home is priced to start. Obviously you won’t want to go anywhere near asking price on one that is grossly overpriced, on other homes you should feel completely confident in bidding $5,000 or more over asking price if the home is listed at well under market value, and as most will list at general market value those will sell close those levels.
Cash sales have been accounting for 35-40% of all sales for the last 2 years, so to all the cash buyers out there…you’re not as rare as you used to be and not alone. It will still give a significant advantage over financed offers, but these days you’re likely to encounter competition from other cash buyers as well on the same property.