Profile picture for barbaraluciani

When selling for "cash only" should I expect offers to come in 20-25% lower than loan-backed offers?

My building is over 50% renter occupied. I plan on selling my unit soon and I understand I will only be able to take cash offers due to the renter occupancy rate. Should I expect the cash offers to come in 20-25% below loan-backed offers? Or does "cash only" not affect the amount of the offers any more than with a regular negotiation?
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August 14 2012 - Chicago
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I completely disagree. One of the most attractive things about buying right now is being able to get a great loan. When a building is under 50% owner occupied you must get a portfolio loan. These have ARM. You can have up to a 5% higher rate right now if you go the 5 or 7 year rate on your mortgage. The difference on a payment on a loan at 3.5% compared to 8% is very large. I would expect low offers or pray to get a cash buyer who is willing to make a bad buy. Cash only/portfolio buildings tend to see large drop offs in value.
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August 14 2012
Sorry, I should add that in your situation it usually does devalue the entire complex when it has to be sold cash only. You won't be 20-25% less than any other unit, but you can expect the prices to suffer across the board. 
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August 14 2012
No it makes no sense to me. Most buyers are able to fund their loans, why would a cash offer make a 20% difference? Is it because the cash offer will close a mere 2 weeks faster? I think I'd wait the 2 weeks every time. In my opinion cash offers are only significantly better when the home is in need of significant repair and may have trouble financing. 
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August 14 2012
People can get owner occupied loans for buildings with low owner occupancy %. There should be minimal difference between cash and financed offers. However, if you are over priced then all offers might be 20% off the list price.
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August 14 2012
Profile picture for JohnWilt
Make sure to list your place with an experienced Realtor so you get a professional looking out for your best interests.  They will tell you what to expect cash or conventional.  20-25% seems like a crazy discount.  Besides, there may be comps in your complex that have cash settlements at great prices.  I have seen cash deals this year for nearly list price!  Good Luck
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August 14 2012
The fact is no one can get a loan for a unit in your building. That is why you will be forced to accept a lower offer if you do find a cash buyer. The bigger issue may be the 15% delinquency rate forndo fees for the entire building that may be the reason you can only get cash offers.  I had a condo and we had a simular issue where the rentals were getting to be too large of a percentage of the units. What we did as the copndo association was to grandfather in all the present rentals. And then put a limit on any future rentals. Anyone buying into the building was not allowed to rent if the building exceeded 15% rental units they would need to get on a list. For any current homeowners we had a hardship committee that would review.
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August 14 2012
Buyers with cash often incorrectly assume they are Kings when they usually are not and they incorrectly assume a seller will sell for less knowing the buyer has cash. It is a misconception cash buyers have. You get buyers that make all sorts of crazy low offers, it is a sign of the times. I had a 30% low offer given to me the other day on a short sale. When you get the low offers just say NO.
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August 14 2012
 
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