I'm a prospective first time homebuyer, and will be paying all cash for whatever I get. No mortgage, no bank.

Would anyone be willing to hazard a guess as to how much of a discount an all cash purchase might be worth off of the listing price? For example: if the property is listed at 400K, and I bid five or ten percent less, would the seller likely just not give a hang that I'm an all cash buyer, or would the promise of a cash purchase coax her or him to accept a much bigger discount than usual?

I know, all this depends on how hot or cold the market is, the sentiments of the buyer and on other factors. But most everyone visiting this forum knows more than I do, and even your off-the-top-of-your-head guesses could be valuable to me.

A better idea might be to use that cash to secure a super low interest loan and keep the secured capital in an interest bearing account. Good for you for being able to pay cash, but there are probably better ways to go about this

Usually, Cash is King . . . . because it will typically eliminate some other uncertainties like the Appraisal, Credit Check and Employment verification.

It can be much faster and, with that reduction in the passage of time, also eliminates the prospect of that old "I Changed my Mind Malady".

But some Cash Buyers build in so many contingencies and time delaying hurdles that sometimes there's just as much, or more, uncertainty associated with them as there is with a deal dependent upon a Lending Institution.

So it always boils down to the circumstances of the individuals involved and where their priorities lie.

Thanks, CloptonCapital and Vermont, for your responses ... and a follow-up question to CloptonCapital:

Can you tell me a little more about why it would be to my advantage to get a loan on this, even though I don't need one? That never occurred to me; maybe it should have!

And I'll toss in to the mix inspections. I have a cash sale going right now. Sure there is no appraisal but I have to go through 5 contingencies, 4 of which are inspections. 1, home inspection, 2 is well water, 3 is septic, 4 is termite. 5th is HOA packet. Sort of like VT wrote above.

So I am saying there not much real difference b/w this sale and a loan contingent sale given the price of the property is about 60% of FMV.

This is a rapid sale priced under market intentionally.

So cash is king, but do your inspection before hand and you'll be king of the kings. Cash non contingent is good as gold, so to speak.

In my experience, a cash buyer will beat out a financed buyer if the financed buyer could be describes as "sketchy", in other words - highly leveraged, lots of contingencies, weak pre-approval.
But a strong financed buyer, one with a large down, buying as is and not asking for seller assist will beat out a cash buyer if they offer more. The financing generally only adds a week or two to the transaction time.
And there is no real formula for a percent off list price that would be accepted.

I have a deal in escrow right now where my buyer, who is financing, submitted an offer that (according to the listing agent) turned out to be lower than a second, all-cash offer. The seller opted for my buyer's offer instead (with a few reasonable counteroffer points).

I don't know the other terms of the cash offer, but that's only one of many different factors the sellers consider when reviewing offers. Some cash buyers make the mistake of overvaluing their own money, such that they become unreasonable when it comes to the other parts of the contract.

Unless you're dealing with desperate sellers, a cash offer will usually get you a moderate discount on price (a few percentage points in my area, usually); an all-cash, fully non-contingent offer is what will get you the bigger discounts.

Thanks, Doin'bpose, PA Roadkill and Andy Perkins, for your thoughts!

I talked to my accountant, and she thinks the main reason to take out a loan I don't necessarily need is if I want to invest the money in something that will pay more interest. I could do that, I guess, but I think I'll stick with my plans for a straight cash purchase.

I will have contingencies, though, at least for general home and pest inspections. I just don't feel remotely sophisticated enough to attempt an 'as is' buy on my first home. Maybe I'd get away with it, but ...

You could pay cash and then secure a home equity line of credit. It may cost a little to set up, but then you can draw on it when you see an investment opportunity.

It really depends on the seller and their motivation. If it is a bank-owned property, they could easily knock off 10% or more for a cash buyer with no contingencies. A private seller probably would not, unless their house was overpriced to begin with.

I disagree that banks automatically knock 10% off for CASH deals, its a much more complicated process.
Banks price homes after multiple BPO's, appraisals etc based upon who they determine their most likely buyer is; if the likelyhood is that the property will not qualify for financing; it will be priced for a cash sale. Coming in with a low cash offer is this setting will get you nowhere-unless there are no other offers...I hear this type complaint all the time from buyers agents...its a cash offer..they should accept less..response is always property is priced for a cash offers.
If the property is in average condition and likely will qualify for most financing options AND the seller is willing to wait 60-90 days for a close, the proprty will most likely be listed at a higher, less distressed value, you may be able to come in with a lower cash offer in this setting if the seller is tempted by your quick close date; but that depends upon the other offers on the table also.
Alss every asset manager manages offers differently, some jump at cash sales, some dont.
In other words, if I were shopping for a great buy, I wouldn't focus on how much lower I could offer below list if I had cash. I would focus on buying a property below value that meets my needs whether that would be a residence or rental property and that may mean buying over list price if I determined it was underlisted.
Look at REO properties with lengthy listing periods.

From a seller's point of view, they always get cash, whether the cash comes directly from the buyer or comes from the buyer through a lender.
It's property condition and the other segments of the offer (closing date, inspections, seller assist, strength of pre-qual letter) that make the difference. And they need to determine the cost of carrying the property for an additional 30 or 60 days. In general, the rule of thumb is 1% of the value for every month it stays in inventory.

I disagree with getting a loan to buy a house if you have the cash. Whatever you would put your cash into that can beat the interest rate on any kind of mortgage rate you can get comes with quite a bit of risk I would say. But then I'm from the mindset that no debt is the best way to live. No matter what the media or anyone tells you about debt being a good thing.

Short answer is that it depends. Given two offers at an equivalent price, an all-cash offer likely looks better and more of a "sure thing." You might even get a modest discount, but too much and they will go with the financed offer instead.

Let's say that a buyer has to choose between an all-cash offer and a financed offer that is $10,000 higher. If the financing looks strong and there is no strong time pressure, most folks are going to wait 30 days for the higher price. In that case, you are not going to get a discount. You are going to lose the property to soemone else.

Banks seem to be ambivalent when selling REO properties. All they care about is the bottom line, and they are accustomed to waiting for mortgages to close in a month or so.

If you are competing against an offer that looks weak on financing or contigency terms, a discounted cash offer can often win.

Pretty much the only time I see big "all-cash" discounts right now is on properties that do not qualify for mortgages. Without traditional financing available, the buyer pool is extremely small and you are in control of the seller's situation.

You may also run into a highly motivated seller that needs out quickly, in which case a significant all-cash discount may be possible, but this isn't super frequent.

Like I said, it depends!

Too many cash buyers overestimate their position and end up missing out on opportunities by low-balling. In my market, about 40% of all transactions are cash, particularly in the high-end sector. So to the OP, I'd suggest working with an agent with a proven track record as a negotiator, then he/she can (hopefully) get the best terms/conditions possible. Best of luck and post an update when you get further along in your purchase process.

It is all cash in the end. I mainly sell REO's and the sellers usually just look at their net.