Cash Purchase Discount?

[Ryan Rudy]

We are just starting out in the REI game in Central PA and we have a business plan meeting with a local bank to discuss an unsecured LOC over traditional financing. We want to drive home the fact that cash purchases give us more buying power in the market.

On average what would be the savings/discount when a property is purchased with cash?

I know it varies per state/market but we are just trying to find some type of figure that we could use.  Thanks in advance!

[Will Fraser]

Hi @Ryan Rudy, I'm going to come out of the gate here with a different angle:  be careful!  I consistently see cash buyers overpay for a property and, being well aware of this, many investors and speculators (builders, wholesaler, agents, etc) target cash buyers with properties because they know they don't have to "worry" about a low appraisal.

So, in theory "cash is king" leads to discounts on deals, but if we approach the subject with intellectual honesty we'll find that this frequently isn't the case.  

The biggest advantage cash has over finance outside of the lack of appraisal/lending contingency is speed.  If you're going to truly execute your strategy in a way that buys at a discount then it will be based on the discount that speed can leverage.  So, what is the value of speed?  More to the point, to whom is speed valuable?