Typical discount for cash purchase on $1+ million homes?
First, I assume you understand that 'Cash Offer' doesn't mean you really show up with cash (in a duffel bag...), but is an expression that designates that you don't need a mortgage approval, but have the money in your accounts. The advantages for the seller are With both cases depending on the seller's situation, there can't be a generic answer, and the 'discount' will be all over the place between zero and several percent. I don't have a solid data-backed answer, but this is too lengthy for a comment. I've read that on average, about 1-2% is what you can get as a cash discount on a home purchase, all else being equal, but no hard data to back that.  In certain situations it makes sense for a cash discount to be much greater than that, for instance, if the seller is in a hurry to close and your cash offer has no inspection clause. Similarly, if a house has been re-listed after a sale fell through you might get a greater cash-discount, or if an owner just over-values the advantages of a cash-offer. Anecdotally, I had a neighbor take a cash offer 5% below asking and they had multiple offers at asking, they took the cash offer so they could close faster (15 days). Also, I've lost out to a cash offer, also at 5% below asking, and they also had a short-closing period and no-inspection, my offer was over asking on that one, so total cash discount > 5%. There can be more volatility in the luxury home market, but I wouldn't guess that changes the cash vs financed evaluation much.  Would love to see if anyone finds a good source, but even if they do, an average is only so helpful.
Cash is very effective at getting a discount when buying from individuals (craigslist, garage sales, estate sales, flea markets, etc.).   I'll make an offer, then thumb through the cash while they consider it.   There eyes will dart back and forth between my eyes and the cash as they decide whether to take my offer. Car dealers do seem to be very unique.   The dealer I bought at recently said that 70% of their deals were cash purchases, JoeTaxpayer's dealer said 1% were cash purchases.   I've had good luck negotiating with cash for well-loved cars (under $10K) from both individuals or used dealers. I'm also looking for carpet for my house and the first vendor I went to offered at 5% discount if I paid up front (no financing). Your house and 25 acres was $50K? How is that even possible? Growing up in the 90's the average house in my town was around $600k. Now median home prices in that area are around $1 million. This is a suburb of Boston, so it's not like I'm talking about a place in an actual city.  Prices fluctuate in real estate so much depending on location. Growing up in Massachusetts and then doing my undergrad near NYC, my experience with average or entry-level home prices told me they were always over half a million. It didn't really hit me that prices varied significantly until I went to get my Masters from Syracuse, my friend's father decided to just buy a 5 bedroom house on the edge of campus rather than pay her rent. It was so cheap it made sense (a little under $100K, so he bought it with straight cash).   But still, 25 acres and $50k sounds unreal today. Like the cost of building materials alone would be more than that, forgetting about the cost of land. "I would strongly consider renting; as homes are often viewed by people as ""investments"" but in reality they are costs, just like renting. The time-frame for return is so long, the interest rate structure in terms of your mortgage payments; if you buy, you must be prepared to and willing to stay at minimum 7-10 years; because anything can happen. Hot markets turn cold. Or stale, and just the closing costs will cause it be less advantageous to renting.  Before buying a property, ask yourself does it meet these 5 criteria:  IDEAL I - Income; the property will provide positive cash flow through renters.  D - Depreciation; tax savings.  E - Equity; building equity in the property- the best way is through interest only loans. There is NO reason to pay any principle on any property purchase. You do 5 year interest only loans; keep your payments low; and build equity over time as the property price rises. Look how much ""principle"" you actually pay down over the first 7 years on a 30 year mortgage. Virtually Nil.  A - Appreciation - The property will over time go up in value. Period. There is no need to pay any principle. Your Equity will come from this... time.  L - Leverage; As the property becomes more valuable; you will have equity stake, enabling you to get higher credit lines, lines of equity credit, to purchase more properties that are IDEA.  When you are RICH, MARRIED, and getting ready for a FAMILY, then buy your home and build it.  Until then, rent, it will keep your options open. It will keep your costs low. It will protect you from market downturns as leases are typically only 1 year at most. You will have freedom. You will not have to deal with repairs. A new Water Heater, AC unit, the list goes on and on. Focus on making money, and when you want to buy your first house. Buy a duplex; rent it out to two tenants, and make sure it's IDEAL." I had a similar situation when I was in college. The difference was that the dealer agreed to finance and the bank they used wanted a higher interest rate from me because of my limited credit history. The dealer asked for a rate 5 percentage points higher than what they put on the paperwork. I told them that I would not pay that and I dropped the car off at the lot with a letter rescinding the sale. They weren't happy about that and eventually offered me financing at my original rate with a $1000 discount from the previously agreed-upon purchase price. What I learned through that experience is that I didn't do a good-enough job of negotiating the original price. I would suggest that your son stop answering phone calls from the dealership for at least 1 week and drive the car as much as possible in that time. If the dealer has cashed the check then that will be the end of it. He owes nothing further. If the dealer has not cashed the check, he should ask whether they prefer to keep the check or if they want the car with 1000 miles on the odometer. This only works if your son keeps his nerve and is willing to walk away from the car. If you intend to flip this property, you might consider either a construction loan or private money. A construction loan allows you to borrow from a bank against the value of the finished house a little at a time. As each stage of the construction/repairs are completed, the bank releases more funds to you. Interest accrues during the construction, but no payments need to be made until the construction/repairs are complete.  Private money works in a similar manner, but the full amount can be released to you at once so you can get the repairs done more quickly. The interest rate will be higher. If you are flipping, then this higher interest rate is simply a cost of doing business. Since it's a private loan, you ca structure the deal any way you want. Perhaps accruing interest until the property is sold and then paying it back as a single balloon payment on sale of the property. To find private money, contact a mortgage broker and tell them what you have in mind.  If you're intending to keep the property for yourself, private money is still an option. Once the repairs are complete, have the bank reassess the property value and refinance based on the new amount. Pay back the private loan with equity pulled from the house and all the shiny new repairs. Warranties are usually sold at 60-90% margin. They are just about always a bad deal. If you are forced to buy one, negotiate on price, and be wary of realtor or mortgage broker recommendations. The best way to get cash from retirement is to not do it.  Leave the retirement savings alone.  Start saving for house down payment.  Look for ways to squirrel away money for that down payment.  Consider payment plus insurance, taxes, and maintenance costs.  If all that comes in less than a rental, you're probably better off buying.  Most likely it will not.  Make sure that when you go to buy, you have 20% down, AND an emergency fund that will cover you for 3 months of expenses at the new, higher, rate.  Hint, that'll probably be in excess of 10k based on a single person with a 1.5-2k a month mortgage, plus utilities and food.  And as a home owner, you will have a lot of things for which that emergency fund will come in handy.  It's a matter of when, not if.  Consider, 5k for a new roof, 6k for a hvac system, 1.5k for exterior paint, 500 for the plumber, 750 for pest control, 250 to have the tree removed that fell in a storm.  1000 for a new fridge.  500 for a new water heater.  1200 for washer and dryer.  ALL of these are periodic costs, and they all able to fail before they're supposed to. "Pre-edit, Pete mentioned that he feels real estate agents would (a) like you to buy as much house as you afford, and (b) would love to show you three houses and have you choose one.  As a real estate agent myself, I believe his warnings were understated. As with any industry, there are good and bad people. Agents are paid to move houses. If the median US home is under $200K, and commissions average say 5%, the $10,000 to be gained is split between the buyer brokerage and selling agent. The $5000 to each is then shared with 'the house.' So, this sale would net me $2500, gross. Move one a week, and the income is great, one per month, not so much. Tire kickers will waste an agent's time for a potential decision to wait another year and continue renting. Their obligation is to tell you the truth, but not to offer financial advice.  Remember the mortgage crisis? It seems the banks and brokers aren't watching out for you either. They will tell you what they'll lend you, but not what you can afford. These numbers are worlds apart.  I strongly recommend a 20% downpayment. The FHA PMI calculator shows that a 90% LTV (i.e. a 10% downpayment) for a $100K house will cost you $1200/yr in PMI. Think about this. For the $10,000 that you didn't put down, you are paying an extra $1200 each year. This is on top of the interest, so even at 5%, that last $10,000 is costing nearly 17%. If you can't raise that $10K (or whatever 10% is on that house) in cheaper funds, you should hold off. Using the 401(k) loan for this purpose is appropriate, yet emotionally charged. As if suck loans are written by the devil himself.  ""Buy the biggest house you can""? No. I have a better idea. Buy the smallest place you can tolerate. I have a living room (in addition to family room) that has been used 3 times in 20 years. A dining room we actually use. Twice per year. When your house is 50% too big, you pay 50% more property tax, more utility bills, and more maintenance. Closing costs, commission, etc, isn't cheap, but the lifetime cost of living in a too-big house is a money pit."