Discount for all cash offer

20%

Thanks @anton. I should also add that the apartment appraised at $1.3M (pre-covid comps)

The only benefit to the seller in an all-cash offer is that you could potentially close quicker without a bank involved, and there's not the chance that the bank would nix the buyer's financing, and thus break the deal. Also, a co-op board may look at an all cash deal as favorable (depends on the rest of your financials). Any discount is better based on your realistic assessment of the value of the apartment.

Thanks @aaron2. My thinking is that an all cash is significantly more likely to go through compared with a financed offer in given the current market conditions. In addition to people losing jobs and taking salary cuts, banks are requiring more documentation and higher qualifications. My bank now requires two employment / salary verification checks before moving ahead, dated in the last 30 days.

However, I'm not sure the seller sees it that way. I think they are just looking at the final number and thinking they get their money either way.

Hence not sure what a realistic discount is. E.g. what is the value of the risk of losing financing and the longer close in today's volatile market?

It sounds as if you think there's not much of a discount b/c the only benefit is really just the shorter closing time. I think that's probably worth $10K to them.

Over 40 years my experience is the expectation of those asking that question far exceed the reality of either the actual benefits to or willingness of sellers to offer discounts. Perhaps if some large percentage of deals start falling through due to failing financing that would change, but the percentage of deals which don't close has always been small, especially when seller's brokers do their jobs and make sure buyers are properly qualified.

"All cash" is essentially a partial insurance policy to closing. How much are sellers willing to pay for such an insurance policy especially given in recent deals a high percentage have been either all cash or no financing contingency? My guess is not much.

Add to that in my experience the majority of those asking that question are making low offers looking for a good deal, which is an area of deal making where the offer being all cash is a necessity as opposed to an option, you don't get an additional discount for meeting minimum requirements.

Thanks @30yrs_RE_20_inREO.

Theoretically there were 30M+ buyers who would have qualified 2 months ago & now would not qualify (due to unemployment). Also foreign all-cash buyers are drying up. You cannot get a visa now and there's the ongoing FINRA investigation w cash purchases.

It sounds as if you are saying there are still more than enough qualified buyers in NYC who can make all cash offers and that they too would not want a discount. Would love to hear from other buyers about their thinking.

When I sold some years ago, I turned down a cash offer that was 1% lower bc the cash wasn't in an account. Rather, there was an inheritance expected but not yet transferred. Cash is only cash if I can see it sitting in an account and the offer has no other contingencies or outs, along with a high earnest money deposit. In that case, it depends on the other offers. Someone who has stretched themselves to the point of breaking is different than someone who wants a mortgage for the tax deduction.

I've said it a bunch of times, but clearly I need to say it again: in my experience co-op boards do not regard a lack of financing as advantageous. Board members are often either lazy or quite competent but stretched thin, depending on which building you get, and they're now being presented with a buyer who has not gone through vetting from a third party, so it dumps more work into their lap.

ali r.
upstairs realty

Thanks @George and @front_porch. I have the cash in a liquid account. No contingencies on a sale or inheritance. From this thread, it sounds as if there is no advantage to an all-cash offer, even in an incredibly volatile market.

The apartment was appraised at $1.3M means the contract price is 1.3M, and asking should be not much higher. Sellers are not realistic in today's market, so they might not give any discount for all-cash offer, but are you still moving forward?

Of course there is an advantage, it's just not huge.

Definitely has advantages... but I agree with many above... its just not as huge as one might think.

But with the market the way it is... and IMO, I can't possibly see it getting better anytime soon and most certainly worse, you can just wait out the sellers and hold them hostage to your offer ;)

Then again, my opinion about the housing market was also the same for the stock market 1 week ago... LOL

For an apartment price of $1.3M, a high balance Fannie Mae loan ($765K) can be obtained and then get a HELOC for the additional money required. Most banks have done away with HELOCS recently but a few are still doing them. But that can change.
A Fannie Mae loan has a much lower interest rate than a jumbo because Fannie Mae guarantees to buy the loan. With a jumbo loan a private investor is required to buy the loan that has different guidelines than Fannie
Send me an email if you require additional information.
Esfundingco@aol.com

The biggest value from it is not having a mortgage contingency in the sales contract.
There is some value to that.
Additional factors then also will dictate how much this value is such as time of essence clauses and size of deposit.