When selling a home at Mueller, one of the people who has to sign off on the sale price is an independent appraiser – if your buyer has a loan. The appraiser comes along and gives a second opinion of value, notionally independent of buyer, seller and their agents.
Even if a buyer agrees to pay $460,000 for your home with an 80% loan, if the buyer’s lender believes the home is worth only $440,000, the buyer will not be able to borrow 80% of $460,000, only 80% of $440,000. To continue with the sale at the original contract price, the buyer would have to add an additional $16,000 in cash to the purchase. While this is a possibility, if a buyer suddenly finds out that the home they thought was worth $460,000 is worth less to an appraiser, they might not be inclined to pay the original price, even if they have the additional $16,000.
So how does this pan out in Mueller? I took a look at homes that sold on the MLS in the last 12 months, and excluded the affordable homes (which can’t be bought entirely by cash as there are equity limits on the program).
Of 32 sales, 6 were cash purchases – over a quarter. And this spanned the price points from the $300,000 range to the $700,000 price point. For these sellers, appraisals were not necessarily a concern – with no lender an appraisal is not required (though still a possibility).
As a seller, should you bank on a cash sale? Not really – you could take what one client described as a “Hail Mary Pass” and launch your home into the market with a small (in this case around 25%) chance of success, but I wouldn’t recommend it. Cash buyers are not known for paying above market value for homes, so it’s prudent to assume a buyer will need financing, and price accordingly.