Discount for cash?

None -- owner financing is rare -- sellers get all cash in all scenarios. You may be the preferred buyer over another purchaser in terms of financial profile -- or can get a "discount" in a building where there are no mortgages due to sponsor ownership -- but there is not a 3% cash discount -- if that is what you are asking.

If I am selling my co-op, you come in with all cash, and someone else comes in 1% higher with a strong package, they get the apartment.

Is that the case for a condo too?

So far, nothing.

you may get a slight discount with no mortgage contingency and flexible close date, but not much.

Yeah, with almost zero inflation and real interest rates below 5%, no cash discount. This is not 1981!

I disagree--all cash buyers have more negotiating power these days. You cant walk in and say I'm going to offer you 5% less becuase I'm paying all cash but a seller will take into account a buyer with no mortgage contingency in their contract for sure. It will also help you with a seller who wants to move quickly as the deal can move much faster--no waiting for financing. There is no hard fast rule, but cash always gets peoples attention

In my experience, "all cash" has some leverage only when the seller is in need of a quick sale - the thought of a mortgage application - the time and uncertainty - will occasionally lead to a price deduction - somewhere in the 5% range.

I offered to buy a studio for cash, expecting a discount. Sellers don't want to deal even though they have more inventory than they can readily sell. My response, if the cap rate is sub 4%, I'd rather buy distressed BP or Anadarko Petroleum at deep discounts to yield 7% or 8%. Let the developers sit on their condo inventory. If you have cash take advantage of today's market opportunities, don't pay up for someone else's problems.

Distressed BP or Anadarko Petroleum BONDS. Obviously the stock is a lot riskier.

Disagree, disagree, disagree.. A bird in hand is worth two in the bush. Financing pushes closes out weeks if not months and opens up to all types of issues -- property doesn't appraise, market risk, etc. Even if the owner is irrational, brokers are not and will push for best execution.

All cash should get you some consideration, but it depends on how hard it would be to finance. For a typical condo or coop studios, I wouldn't think financing is difficult. Maybe for a property requiring a jumbo mortgage you could get more flexible sellers.

I'm sympathetic with PMG. I just don't get the sub-4% cap rates.

As to the original question, I think a 2% discount is reasonable as a bird in the hand...

There are buildings out there which only allow buyers to finance a certain percentage, and therefore it limits the amount of prospective buyers. In this situation the price may be lower than a comprable unit that allows 80 to 90% financing.

Typically it gets you a single-digit discount from the financed price, but the size of that single digit discount depends on each individual seller and their situation.

Have you seen the place my firm has listed in Chelsea? Corner prewar studio, good-size separate kitchen (needs updating), elevator building, low mtc.

http://streeteasy.com/nyc/sale/528699-coop-253-west-16th-street-chelsea-new-york

ali r.
DG Neary Realty

Why should there be a discount if the purchaser is willing to forgo a mortgage contingency?