Is Cash Really "King" in Real Estate Today?

Yesterday, I had a client ask me, "isn't Cash King in purchasing real estate"?

Good question...

I've heard different variations of this...

'Everybody loves cash'

'Cash Speaks Volumes'

'When they know I'm paying cash they'll jump at my offer!'

Hmmm...

I think cash is king if the price offered is acceptable.  And that's really what it boils down to.

In 2005 when we were in multiple offer situations on homes listed for sale, often, Cash was King.  We would list a house for sale in the MLS at 8:00 in the morning, and by 5:00, without even getting the sign in the yard, we may have 10 offers on the table. At that time the cash offer often was $10,000 to $20,000 higher than the rest of the offers, so it was the one that was accepted.

Under those conditions, who wouldn't want cash over a lender financed offer?  Sometimes cash buyers will agree to take a property in 'As Is' condition.  There is no qualifying, no lender, and no appraisal.  Some cash buyers agree to a quicker closing. Some cash buyers even opt against a home inspection and a termite inspection.  I wouldn't advise this, but, that's their choice.

So, wouldn't every seller today love cash?                                                                                                  

Well, not always.

I think the answer to this question depends on many different factors...

There's no question, in the right circumstances, cash can streamline a real estate transaction in many ways.

Often times in today's market cash buyers come in with offers that might be lower than a lender financed offer. Some are substantially lower.  Depending on the offer, if there are 2 offers presented to a seller, one is cash and one is financed through a third party lender, and the cash offer is $20,000 lower than the other, then often the seller will take the lender financed offer.  For the seller, it is all about what he nets at the closing table. 

However, if there are 2 offers that are relatively close in price and terms, the seller may opt for the cash buyer. 

And what about homes offered for short sale or homes in foreclosure?  Do the banks view the cash offer differently than, say another offer?  Or, does it really depend on if there are other offers and how they look compared to the cash offer?

There are so many factors to look at when determining whether "cash is king".

I don't think there is one hard fast rule as to determine whether cash is the best. I think every offer must be looked at on a case by case basis.

What do you think?  Do you think that cash is king?