How much impact does an all cash offer have on an REO?

Question

I know this doesn't have a succinct answer, so I'd love to hear you anecdotes.

I have heard only generalized stories, saying that basically all cash is better, you can get it for less, less garbage for the banks to deal with, fewer potential issues, etc.

Say a home is listed for 50k, how much more play would you feel you had going in cash, does it really matter?

David Zamarron · Answer

Matt:  It depends on the REO entity.  Federally backed organizations like Freddie, Fannie, HUD and the VA generally negotiate 5-10% off asking price.  They typically consider price adjustments in 30 day cycles so if you don't get your price, track the last price reduction and stand-by for a lower asking price.  The non-governmental REO entities in general are more aggressive.  This is where a good rapport with the listing real estate broker is crucial.  Occasionally the asset manager will encourage them to bring all offers.  You want to be first on the call list when they get this call.

Will Barnard · Answer

I would agree with David and he gave a pretty damn good answer to what is a very difficult question to answer. Howe much impact does a meteor have on the Earth? - Depends on a number of factors, right!

Aside from price, the balance of items in the offer also hold weight such as closing period, inspection/contingency period, agent representing your offer, letter with offer, POF, etc.

Geoffrey Hoffman · Answer

Many REOs must be cash purchase, or rehab loan.  You are not the only cash buyer out there.  There is always some wiggle room in price, but don't think you are not competing with other cash buyers.

Mark Gallagher · Answer

@Matt Gee

I have seen plenty of times where if a financed offer is even $100 more than a cash offer, the financed offer gets selected. A bottom line is a bottom line to some entities. It also depends on the time of the month, at the end of the month there tends to be more flexibility if the asset manager needs to meet goals for properties under contract.

HUD typically has the greatest flexibility, especially with uninsured sales.

Matt Devincenzo · Answer

Also it is very dependent on the general condition of the particular property. An ugly avocado kitchen in an otherwise decent home...don't expect much because the home is still financiable. The property with a leaky roof and caved in living room ceiling from last month's downpour...now you've got a restricted buying pool where the only one's making offers are investors who won't pay as much. That said you may still have to wait 3 months before the bank realizes that you price is right.

Matt Gee · Answer

Thanks guys.

Obviously there are numerous externalities that could affect it.  I see about the OO preference for homepath, I've also seen more and more about building a relationship with listing agents of foreclosures...

How much impact does an all cash offer have on an REO?

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