A few days ago I took a call from a past client whose elderly parents are thinking of purchasing a smaller home. As she filled me in on their wants and needs, it was becoming apparent that the price of those wants and needs would exceed the stated budget. Past Client then said "well, they will be paying cash. Won't that give them some major flexibility on the price?"

Hmmmm.                                                                               

Would it?

The answer isn't a simple yes or no. It depends on what is most crucial for the seller during the transaction. If the likely sales price is on the generous side, there is the potential for the home not appraising. That's not a problem with a cash buyer (assuming they don't pay for their own appraisal!).

Conversely, if the likely sales price is barely at the break-even point and all parties want to avoid a short sale situation, the seller may have a specific price he/she simply can't dip below, rendering the 'cash is king' argument useless. For many sellers, price is the number one component, with other terms such as method of payment and closing dates secondary. Of course there are other sellers for whom terms have a higher priority than the price, but I'll save that for another day.

Back to the original question: will paying with cash buy some major flexibility on the price? It's possible, but it all depends on the situation of the seller and how they view it. As a listing agent, I am not automatically bedazzled by a cash offer. There are some great lenders out there who have never failed my clients. I feel confident about the 'closability' of the sale when I see their pre-approval attached to an offer. I would rather see a fair offer with financing from a trusted lender than a lowball offer with a suitcase full of cash.