Is Cash Really King?

a lovely home in Tucson How much negotiating power do you get from buying a home with cash?

Not as much as you might imagine.  Surely, when it comes to buying homes in need of repairs, cash is the preferred way to pay.  Many fix-up homes can’t be easily financed.  Also, when you buy a home with cash, the Seller isn’t worried about an appraisal or that a loan approval will fall through, making cash offers more attractive overall.

But do cash buyers really pay less?

Turns out, yup.  Just not an incredibly large amount less.

The biggest three purchasing vehicles in the Tucson market are cash, conventional financing, and FHA financing.

  • FHA buyers pay on average 98.8% of list price and purchase less expensive homes, at an average of $159k.
  • Conventional buyers pay 96.5% of list price, and buy homes priced at $287k on average. 
  • Cash buyers pay 95.5% of list price and buy $220k homes on average.

34% of cash purchases are fix-up homes.  Unsurprisingly, only 8% of both FHA and Conventional buyers select fix-up properties.

So yes, on average, cash home buyers pay less in Tucson, by about a percentage point.  Conventional financing is by far the most common way to purchase.  And FHA buyers often have closing cost assistance from the Sellers, which usually means they pay a little closer to the listed price to get those closing costs.

Equal Housing Opportunity Realtor