Updated Negotiability from Original Ask (Contract Signed based - at the time of the deal)
- Thread starter Noah Rosenblatt
- Start date
Looks like discounts competing with "peak COVID fear" months.
Yeah, in Oct it does...inteesting. Still need moe data to come in and it is a bit early, but telling nonetheless
market is active right now
market is active right now
RichardBerg
New member
Months with partial data are going to be skewed toward cash buyers. No surprise that people with finance contingencies take longer to close + can't negotiate as strongly.
In my experience buyer's perception of discounts for "all cash" are overblown. When the norm was sellers holding paper it was a big deal. But these days sellers walk away from closings with "all cash" at the end of the day, and with pre-approval being fairly universally demanded (and no financing contingency in a lot of financed deals) I'm not seeing deals fail financing. Perhaps someone can correct me by providing the figure and show how high it is.
Again in my experience, "I'm all cash!" is often a cudgel buyers attempt to use on sellers to get a better price, but most of the time merely wins a bidding war at equal price rather than getting a discount.
Again in my experience, "I'm all cash!" is often a cudgel buyers attempt to use on sellers to get a better price, but most of the time merely wins a bidding war at equal price rather than getting a discount.
agree! John was clear on that point when we first discussed..totally
There is truth in this. I mean, they have every right to try and leverage up that cash bid during negotiation..im curious now what the CASH incentive is - that will be a bit of work as we need to access data that we havent normalized and integrated yet re: mortgages. I always thought it was a few bps
Brokers have been training sellers for over 2 decades that pre-approvals were just about a guarantee that the buyers they were presenting were "as good as cash." So why would it be a surprise that sellers now believe this?
In addition, for the past X years we have been told a large percentage of deals are all cash. If that's true, isn't "all cash" already baked into the price to begin with? Or do brokers only use comps with financing to present value to owners when they do listing presentations?
Are we saying financed apartments are worth more? Think of the billions of dollars which must have been lost in all those all cash transactions over the last decade. If only those sellers could have held out for buyers who needed financing so they could have gotten higher prices.
In addition, for the past X years we have been told a large percentage of deals are all cash. If that's true, isn't "all cash" already baked into the price to begin with? Or do brokers only use comps with financing to present value to owners when they do listing presentations?
Are we saying financed apartments are worth more? Think of the billions of dollars which must have been lost in all those all cash transactions over the last decade. If only those sellers could have held out for buyers who needed financing so they could have gotten higher prices.
"Or do brokers only use comps with financing to present value to owners when they do listing presentations?" - I doubt brokers take financing into account unless a comp is abnormally low (cash or other discount) or high and they start investigating.
"Are we saying financed apartments are worth more? " - not in all scenarios, but most I would say yes. Depends on how much the buyer wants that property and the competition that exists at the time of bidding. But in general, all cash buyers do 'expect' a steeper discount for offering a smoother/faster transaction with less risks. What is that worth? Depends on so many factors it will be impossible to measure: sellers desperation to liquidate, the product at play, the pricing.
This is an obvious one --> All cash as an incentive is most effective when there are no other competing bids. If there are competitng bids, a review of the strength of each bid and the difference between the bids is warranted. I would think once you get past 1-2bps, the decision gets easier for the seller
"Are we saying financed apartments are worth more? " - not in all scenarios, but most I would say yes. Depends on how much the buyer wants that property and the competition that exists at the time of bidding. But in general, all cash buyers do 'expect' a steeper discount for offering a smoother/faster transaction with less risks. What is that worth? Depends on so many factors it will be impossible to measure: sellers desperation to liquidate, the product at play, the pricing.
This is an obvious one --> All cash as an incentive is most effective when there are no other competing bids. If there are competitng bids, a review of the strength of each bid and the difference between the bids is warranted. I would think once you get past 1-2bps, the decision gets easier for the seller
Re:"sellers desperation to liquidate"
I think one thing we learned about 2020 is that by and large this hasn't happened (at least not yet). Even "panic selling due to COVID" didn't really happen to any large extent - sellers who said they really needed to sell back in the Spring under lockdown were turning down "low offers" but are still on the market over half a year later. Contrast this to the sale of the mortgage on Crown Plaza hotel at >50% off.
I think one thing we learned about 2020 is that by and large this hasn't happened (at least not yet). Even "panic selling due to COVID" didn't really happen to any large extent - sellers who said they really needed to sell back in the Spring under lockdown were turning down "low offers" but are still on the market over half a year later. Contrast this to the sale of the mortgage on Crown Plaza hotel at >50% off.