Why do sellers prefer cashBuyers who are getting slammed out of the Silicon Valley real estate market due to low inventory and multiple offers are extremely frustrated. In many cases, they write offer after offer, and each time not only are their bids rejected, but they never even get a counter offer.

You should not depend on getting a 2nd chance, of course.  Just because you write a contract on a San Jose area home does not mean that the seller needs to give you a counter offer.  Some agents and sellers don’t respond at all – not nice, but if you get dozens of offers, sometimes that does happen.  Sometimes they just take the best offer and run. Othertimes they only counter the best offer and forget the rest.

The question arises all the time: why isn’t my 20% down offer just as good as the 50% down or the All Cash offer? Isn’t 20% down good enough? Or for that matter, why wouldn’t a 3.5% FHA backed loan be suitable?

Cash is better because there’s less risk

Twenty percent down is “good enough” if there are no other offers. If it’s multiple offers, though, it’s probably not sufficient for most sellers provided that the all cash offers are written with realistic pricing. Right now, 25% of all sales in Santa Clara County are all cash, and sellers would far rather deal with an offer that includes no finance or appraisal contingencies.  For sellers, the fewer contingencies the better and no contingencies is ideal.  Particularly now, when we are seeing a very sudden and dramatic upswing in pricing, appraisal contingencies can kill an offer’s chances of success. With all cash, there is no appraisal at all – it’s a slam dunk on that front.

What happens if the property doesn’t appraise?

With the 20% down (or FHA or other loan product) situation, if the property does not appraise to the sales price, either the buyer will have to put in more cash, the seller will have to reduce the price, or the house/condo/townhouse will end up going back on the market.  That appraisal is a great “safety net” for buyers but for sellers it’s an albatross!

Don’t lose heart, many cash buyers are unrealistically low in their bids

What I’m finding is that with multiple offers and cash buyers, some of those with money in hand are overly confident on what that no-loan status will bring them.  Recently I got 20 offers on a Santa Clara condo listing, 8 of them cash, but of those, only 2 or 3 were really ever contenders.  The rest of the buyers who were flush with money grossly under bid the home.  The cash is probably worth a 2-3% discount – but some cash buyers were off by much more than that – a giant gap of more than 15% from the lowest cash offer to the highest financed offer.

In most cases, the best cash offer will get a counter that raises it closer to the financed offer – but perhaps not all the way to that amount.  But the unrealistically low cash offers will get completely passed over.

As a buyer with a loan, what can you do?  Here are a few ideas:

  • Try to avoid multiple offer situations (that may mean bidding on properties which are overpriced, distressed, need work etc.)
  • Ask your agent to assist you in finding off-market properties (this will probably involve your signing a buyer broker agreement, since the MLS is the way in which agents are promised compensation for their work)
  • Analyze which parts of the valley appear to be over heated – are there other areas which would suit you as well which are not getting so much attention? you may find a much better deal, and better odds, there.
  • Find ways to make your offer less risky to the seller.  Some buyers will write non-contingent offers (no loan or property)

It’s hard to be a buyer right now, especially a first time home buyer.  There are often lots of offers written before one gets accepted.  If you can bring in a larger cash downpayment, it will improve your odds tremendously.  Cash remains king!

  1. 4 beds, 3 baths
    Home size: 2,568 sq ft
    Lot size: 13,599 sqft
  2. 5 beds, 3 baths
    Home size: 2,810 sq ft
    Lot size: 7,701 sqft
  3. 3 beds, 2 baths
    Home size: 1,755 sq ft
    Lot size: 6,120 sqft
  4. 4 beds, 2 baths
    Home size: 1,451 sq ft
    Lot size: 5,702 sqft
  5. 5 beds, 2 baths
    Home size: 2,820 sq ft
    Lot size: 6,237 sqft
  6. 3 beds, 3 baths
    Home size: 1,507 sq ft
    Lot size: 6,224 sqft
  7. 4 beds, 2 baths
    Home size: 1,313 sq ft
    Lot size: 5,000 sqft
  8. 3 beds, 3 baths
    Home size: 1,537 sq ft
  9. 4 beds, 3 baths
    Home size: 2,462 sq ft
    Lot size: 13,599 sqft
  10. 4 beds, 3 baths
    Home size: 2,288 sq ft
    Lot size: 8,058 sqft

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(all data current as of 9/22/2018)

Listing information deemed reliable but not guaranteed. Read full disclaimer.


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Mary Pope-Handy
Sereno Group Real Estate
214 Los Gatos-Saratoga Rd
Los Gatos, CA 95030
408 204-7673
Mary (at) PopeHandy.com
License# 01153805

Selling homes in
Silicon Valley:
Santa Clara County,
San Mateo County, and
Santa Cruz County.
Special focus on:
San Jose, Los Gatos,
Saratoga, Campbell,
Almaden Valley,
Cambrian Park.
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Mary’s Blog Awards
Top 25 real estate blogs of 2018 by RentPrep2018 RentPrep.com's list of top 25 real estate blogs to follow

Top 25 real estate blogs 2016
2016: Personal Income's list of top 25 real estate blogs.

Best Realtor blog award
2016: Coastal Group OC's list of best Realtor blogs

The 2009 Sellsius list of top 12 women real estate bloggers
2009: Sellsius list of top
12 women real estate bloggers

Mary Pope-Handy's Live in Los Gatos blog won the 2007 Project Blogger contest, sponsored by Inman News and Active Rain

2007: Mary Pope-Handy and Frances Flynn Thorsen win the Project Blogger Contest for Mary's Live in Los Gatos blog. The contest was sponsored by
Active Rain and Inman News.

Non blog award

Best real estate agent in Silicon Valley from the San Jose Mercury News poll of readers in 2011
"Best real estate agent
in Silicon Valley"

2011 readers' poll,
San Jose Mercury News