Cash is King - Except When It's Not

By
Real Estate Agent with Long and Foster REALTORS (703) 470-4545 0225085927

Certain areas and certain price points of the Alexandria, VA housing market are pretty hot right now.  

Inventory is tight, buyers are plentiful and if you're trying to get into a property in the $500,000 - 700,000 price point right now in Old Town Alexandria that is in decent condition and priced properly, well, you can count on competition.  Lately, on average, we are seeing no fewer than 3 offers and typically around 6 offers in this price point. 

Under other circumstances, a cash offer and a quick closing, with no appraisal contingency, is usually very attractive and may even mean the buyer can offer a little less than full list. 

If you're shopping in certain price points in Old Town Alexandria, though, where the average sales to list price ratio in August, which is typically our slowest month,  is 97.4%, then cash isn't going to change the price much.  In fact, when you are in competition, it is not going to change the price at all - you still will more than likely have to escalate beyond the list price in order to prevail. 

At the end of the day, it's ALL cash to the Seller, no matter the source of the funds, whether the offer is VA, FHA or conventional.

Obviously, there ARE a lot of advantages to a cash purchase, and I don't mean to imply otherwise, but when Sellers are looking at their bottom line, more often than not, they want to net as much as possible from the transaction.  Often, Sellers don't even care about the many advantages of a cash offer, they only care about what they're putting in the bank.  They are happy to wait another couple of weeks if it means their net is higher. 

As agents, we like cash offers because you eliminate the inherent risks of financed offers, although I will be honest here...as a listing agent,  in 14 years I have only had one offer fall through due to financing and we  knew it was questionable from the start, but the Seller agreed to give it a chance.  I've never had a buyer fall through on a transaction due to financing.  

Sure, with cash you can eliminate the appraisal contingency, although plenty of folks in competitive situations do that, anyway, because that is often what it takes to prevail.  As long as the Buyers have enough cash to compensate for a low appraisal, again, it just isn't much of a factor.  

Offers with escalation clauses, no financing and no appraisal contingencies, as well as no home inspection contingencies - except, maybe with the right to void but no repair requests - are not uncommon these days in Old Town Alexandria, particularly in the $500,000 - $700,000 price range. 

Inventory is so low that when a Buyer says "I'm paying cash, how much off the list price can I expect?" we just mentally shrug and proceed to educate them on the realities of the Old Town Alexandria housing market.   There are other terms that may be more important to sellers than whether or not the buyer is paying cash.  In other words, there are plenty of ways to beat a cash offer.  

Especially for first time home buyers or folks from outside the area,  it can be tough to understand what it takes to buy a home in certain neighborhoods, but this charming 18th Century town, located on the beautiful Potomac River is home to many historically significant homes on tree-lined cobblestone streets, terrific restaurants and shopping, which makes it highly desirable to many folks - which, in turn, when inventory is low, creates a challenging environment for the home buyer. 

There are ways to be successful in competition for an Old Town Alexandria home, but it takes an agent who is experienced in writing winning offers in a highly competitive environment and who keeps their pulse on the Old Town market.  If you're thinking of buying in Old Town, get in touch and we'll do what we can to insure you write a winning offer

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Debbie Reynolds 10/24/2017 12:00 PM
Topic:
Home Buying
Location:
Virginia Alexandria City County Alexandria
Groups:
Long & Foster Northern Virginia
Bananatude
Bartender, Make it a Double
Crap-Tacular
Old Farts Club
Tags:
old town alexandria homes for sale
buying a home in old town alexandria va 22314
buyers agent alexandria va
how to buy a home in old town alexandria

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Rainmaker
2,045,442
Patricia Feager, MBA, CRS, GRI,MRP
DFW FINE PROPERTIES - Fort Worth, TX
Selling Homes Changing Lives

Susan Haughton - Buyers and sellers in your area will appreciate your knowledge and expertise, especially when it comes to analysis. Cash is king and there are many different things to consider when you're a seller. You make excellent points.

Congratulations on your feature!!!

Oct 08, 2017 08:44 AM #35
Rainmaker
910,748
Joy Daniels
Joy Daniels Real Estate Group, Ltd. - Harrisburg, PA

I love Alexandria, VA - my son and his wife Stacey live there.  Stacey works at Hooray for Books at 1555 King Street - please pop in and pay her a visit since her store is so close to you and the next time we are visiting, I'll let you know and stop in and see you.  We have walked by your offices multiple times. 

Oct 08, 2017 02:38 PM #36
Rainmaker
3,248,403
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC

Susan

An all cash offer will get the sellers attention . . . .

Good luck and success.

Lou Ludwig

Oct 08, 2017 05:54 PM #37
Rainmaker
3,218,557
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Susan, I have done many All Cash Transactions and when nothing sold in years and nothing listed nearby it could be a recipe for failure unless it is an all cash transaction. Once the comps are created then indeed a Preapproved buyer can have a chance... if I was the seller I would take a lesser offer but a sure offer...Endre

Oct 08, 2017 07:19 PM #38
Ambassador
3,113,689
Paul S. Henderson, REALTOR®, CRS
RE/MAX Northwest. - Tacoma, WA
Tacoma Washington Agent/Broker & Market Authority!

I had 2 cash offers in August and many consider this a chance to come in lower than list price. I always require a proof of funds addendum Susan Haughton 

Oct 08, 2017 10:18 PM #39
Rainmaker
514,868
Elva Branson-Lee
Solid Source Realty GA - Atlanta, GA
CDPE - Atlanta Real Estate & Short Sale Agent

Well said, Susan. It's all cash to the seller, so unless the cash offer is competitive it still may not prevail.

Oct 09, 2017 04:14 AM #40
Rainmaker
525,580
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Experienced Agent in Kansas City Metro area

What a beautiful city you sell--Alexandria is such a lovely place to live. I can see why the market is very tight there.  Cash buyers often think they can get a better deal due to the cash status (in this area) when competing against multiple offers

Oct 09, 2017 08:58 AM #41
Rainer
126,363
Stavrula "Sam" Crafa, RNC,GRI, CDPE, PSA
Future Home Realty - Seminole, FL
Providing the integrity and service you deserve.

Great post for any city or town. Love the title, Cash is King except when it's not. It all depends on the sellers goals. 

Oct 09, 2017 10:10 AM #42
Rainmaker
1,434,247
Yolanda Cordova-Gilbert
Richmond, TX

Susan,

 Great minds! I wrote a similar blog a couple years back, when people think that offering $$$ will reduce the price by 80K I too have to explain it's all cash to me!

Oct 09, 2017 02:56 PM #43
Rainmaker
4,797,764
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Good morning Susan.  Excellent points you have written in this post.  The bottom line is that the seller will receive the money for the sale with no real difference from whatever type of offer was made.

Oct 11, 2017 05:10 AM #44
Ambassador
1,881,245
Debb Janes EcoBroker and Bernie Stea JD
ViewHomes of Clark County - Nature As Neighbors - Camas, WA
REALTORS® in Clark County, WA

A quick close is often more enticing than the offer of cash. At least that's been our experience.  Still, the all cash offer has to be somewhat competitive with the other offers...

Oct 15, 2017 10:10 AM #45
Rainmaker
1,963,764
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good points here Susan -  One seller that does care is a builder.  They offer discounts for cash in some cases.

Oct 16, 2017 02:24 PM #46
Rainmaker
3,035,584
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

I have a cash buyer now that is just not getting this and losing out on homes Susan Haughton 

Oct 22, 2017 03:21 PM #47
Ambassador
3,983,611
Debbie Reynolds
Platinum Properties - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

Most of the time the cash offer is cleaner and turns the seller's head. No appraisal and a quick closing are hard to turn down, Susan but sometimes there is more to the story.

Oct 22, 2017 08:14 PM #48
Rainmaker
1,167,586
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

Well said, Susan. Cash is not always king, especially when it comes to those pesky investors who lowball on several properties to see what sticks. And generally a well-written, clean offer from a traditional buyer may win out.

Oct 25, 2017 02:45 PM #49
Rainmaker
2,122,045
Sharon Tara
Sharon Tara Transformations - Portsmouth, NH
New Hampshire Home Stager

Congratulations on a well deserved Feature!

Reminds me of my job many years ago at a car dealership. Cash is king was something I heard a lot there!

Oct 29, 2017 02:12 PM #50
Ambassador
3,393,665
Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Oh, you're so right, Susan! Cash is not always king! 

I did recently have one listed that the buyers were purchasing new construction and HAD to Close very quickly in order to be able to land the home that they wanted in a new development. We received several Offers and the cash Offer was, of course, the lowest but, had the absolute best terms otherwise. We countered their Offer and said it was theirs if they came to list price and they did.

We Closed very quickly on both properties and it was truly a stress-free transaction - no repairs, no appraisal and no delays! Best cash deal I've had in a very long time!

Oct 29, 2017 05:47 PM #51
Rainer
148,526
Elizabeth Bouchard
Long & Foster Realtors - Arlington, VA
Associate Broker in Northern Virginia

I work with a lot of builders and tear-downs and having a cash deal that can close quickly and no lender or appraisal to worry about is often the key - even if it is for a lower price than other offers with contingencies.

Nov 05, 2017 11:45 PM #52
Ambassador
2,313,284
Robert Vegas Bob Swetz
Realty ONE Group - Las Vegas, NV
Las Vegas Henderson Homes for Sale

Hello Susan

Great post my friend and congrats on the Gold Star 

Nov 07, 2017 07:49 PM #53
Rainmaker
1,499,152
Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • Green • GRI • HAFA • PSC Calabasas CA

Cash transactions are my favorite ones as well, unless it is a low ball and there is no way principals will meet anywhere for win/win.

Dec 03, 2017 10:36 PM #54
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