Submitting an All-Cash Offer in New York City

When it comes time to submit an offer on a New York City apartment, how much you offer to put down in cash can make a big difference in how your offer is perceived. Those who can submit an all-cash offer immediately gain an advantage over those financing the purchase. It can be precious in a hot market where there is a lot of competition during a seller’s market. In addition, All-cash offers are great for sellers; the deal is a sure thing and will close much quicker.

For buyers, they stand to get a lower sales price. However, how much you can save depends on each seller. Some sellers prefer a financed buyer if it means a higher sales price.

Here’s what you need to know about making all-cash offers in NYC.

What is an all-cash offer?

An all-cash offer is when a buyer has all the funds to purchase a home independently. They don’t need a mortgage from a lender or bank to complete the sale. When submitting an all-cash offer, you must also attach a proof of funds letter for the seller to take the offer seriously.

What are the advantages of all-cash offers?

Cash is king in real estate. Competing against other buyers makes it hard to do better than an all-cash offer. All-cash offers are so attractive for sellers that they don’t need to worry about mortgage approval. They know the deal will close with the least risk and in a shorter time as no third party is involved. The chance that comes with a mortgage-backed buyer is the home appraisal. If the property is appraised for less than the purchase price, the buyers may be forced to make the difference. If they can’t do that, they may demand that they pay only the appraised value or walk away. The mortgage contingency in the sales contract will allow them to do this without fear of losing their deposit.

Speed is the most significant thing a cash buyer can advertise. An all-cash offer doesn’t mean the buyers will show up on the closing day with a suitcase full of Ben Franklins. It just means they don’t need the assistance of a bank or lender.

It allows the sellers to sell more closely on their terms.

There’s no need for an appraisal from the bank or lender. While still done (and recommended), you can skip home inspections. The sale can occur as quickly as the title company can get the paperwork. If the buyer fails to show up on the closing day with the money, the seller can keep the buyer’s 10% deposit. All-cash offers will also not include a mortgage contingency in the sales contract.

The likelihood of a seller accepting an all-cash offer depends on their circumstances. They’re far more likely to accept a lower offer price if it means a sure and quick sale. For instance, let’s say the seller has an imminent job transfer to another city and needs to sell ASAP. Alternatively, if the seller is in no rush to sell, they may wait for a more substantial offer, even if financed.

What are the disadvantages of all-cash offers?

The high price of real estate in NYC means you’ll need a substantial amount for an all-cash offer. The main drawback to all-cash offers is that you’ll have less leverage once the sale. On the other hand, it can leave you with less post-closing to spend on renovations than if you had taken out a loan. You’ll also want to factor in buyer closing costs when deciding whether an all-cash offer is the correct choice.

Are offers non-contingent?

Not necessarily. While there won’t be a mortgage contingency, there can still be a contingency. A contract rider contingency requires you to sell another property before closing on this one. If your all-cash offer includes any contingencies, it is far less beneficial to the seller. Instead, they benefit from a faster closing time, making them less likely to accept a lower offer.