All-Cash Offer Discount: How Much Do Cash Buyers Save in NYC?

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Submitting an all cash offer on a property in NYC offers a number of benefits including the possibility of a lower sale price and a quicker closing. More importantly, an all-cash offer will usually put you at the front of the line when it comes to the pecking order against competing buyers. This is especially valuable in the case of co-ops and hot listings.

On average, you should expect to save money with an all cash offer. However, the size of the discount you may receive as a result of being all-cash varies by listing. This is because sellers have varying degrees of risk aversion, meaning that some sellers would still prefer a higher sale price from a financed buyer vs. a quicker and lower risk deal with a cash buyer.

Advantages of a Cash Offer in NYC

The advantages of an all-cash offer from a seller’s perspective are a faster closing and a lower likelihood of the deal falling through. Although the vast majority of buyers are qualified for a mortgage in NYC, there are still plenty of risks and delays associated with applying for a mortgage.

Unfortunately, not all buyers end up receiving a commitment letter from a bank or receiving clearance to close. If a financed buyer has a mortgage contingency and the bank doesn’t agree to make the loan, the buyer is entitled to cancel the deal and receive back his or her deposit.

Therefore, a mortgage contingent deal is not a ‘sure thing’ from the perspective of the seller even once a sale contract is signed. Cash deals, on the other hand, usually do not have any contingencies which would allow the buyer to back out of the deal before closing. This means that if a non-contingent, cash buyer fails to show up with the money at closing, the seller gets to keep the buyer’s 10% contract deposit.

As you can imagine, each individual seller may assign a different value to the certainty of a cash deal vs. a mortgage contingent deal. For example, let’s say a seller has an imminent job transfer to London and he or she needs to sell ASAP. This seller will likely assign a high monetary value to a cash offer vs. a financed offer since the latter is lower risk. Therefore, the seller will likely be willing to accept a much lower purchase price from the cash buyer.

If, on the other hand, the seller is an opportunistic investor who is not in a rush to sell, he or she may care very little about having a slightly faster and safer deal versus receiving top dollar for the sale. In other words, the seller will probably only be willing to offer a cash buyer a marginal discount on the purchase price.

Sellers also prefer cash deals since they close faster. This is because an all-cash buyer avoids the mortgage application process which can take up to a month or more in some cases. Financed deals are also subject to additional delays prior to closing caused by the mortgage lender.

Advantages to Buying a Co-op All Cash

Buying a co-op all cash is especially beneficial to the seller because co-op boards are much less likely to reject a cash buyer compared to a typical purchaser who is taking out a mortgage. If you’re able to afford a co-op outright, it usually suggests that you will pass any co-op board’s financial requirements for applicants with flying colors.

With that said, not all cash co-op buyers realize that you still need to satisfy a co-op’s debt-to-income ratio and post-closing liquidity requirements even if you’re paying all cash. Furthermore, some co-ops will be particularly strict when reviewing your application if they feel that you don’t have stable employment and/or a family member is essentially paying for your apartment.

Co-op listing agents in NYC are particularly excited about the prospect of an all-cash offer for the same reason we mentioned above: there’s a higher likelihood of board approval, closing and and eventual commission check compared to a financed buyer.

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