Rental Property Investor · Galesburg, IL · Member since 2016 · 13 posts · 37 votes
Hey guys and gals,
I am helping my parents find a house and we have found one with a real estate agent from the area. So, I was going over the offer we would like to make with her this morning and she told me "Cash" offer doesn't really matter. The seller doesn't care about that. Now to me that can't be right, don't banks/financing back out of deals all the time? Also tried telling her to put in certain terms to make it more appealing to the seller, like inspection amounts that we will cover if somethings wrong and won't back out but she said she has 40 years of experience and that doesn't matter either. Any advice will help. Thanks.
I always say flip it around as if you were the seller...would you rather have $100,000 financed offer or $85,000 cash offer? Everyone is different. I have had more trouble with cash offers than with financed offers. After 20 years I've had more cash offers go dark and walk away than financed offers. Now if they were for the same amounts and I can verify certain things, then of course I would rather have cash. One thing for me is that I can have some comfort with financed offers is I can follow the progress. Has lender ordered title, have they ordered appraisal, has the appraisal come in, did it make value, have they sent closing docs to title.....with cash, I'm just sitting on the sidelines wondering if buyer is going to show up on closing day?
I think you should listen to your agent, but they should also listen to you too and follow your directions. If you want to make a low offer and make it for cash, they should follow your wishes.
What's the price of the house? What do you want to offer? What's the market like where you are? What is the value of the house? Is it priced to sell or is it over priced? What are the repairs you think are needed? Are homes in your area selling at list, over list, below list? Where are you in that mix? Are most offers cash or financed?
Also when you say cash....is that cash cash, like money in the bank cash...or are you using hard money? Hard money or private money is not the same as cash.
168 DAYS ON THE MARKET! DOESN'T QUALIFY FOR CONFORMING LOANS (VA OR FHA)! All cash is the only option. The price is clearly too high with the issues or it would have sold already. Your Realtor should be able to see things from your perspective and present your side of the offer. @Jacob Stokes
Just felt weird and wrong for her to fight me on my way of thinking. I appreciate everybody here giving me more perspective.
You shouldn't have to fight your realtor. They don't need to agree with you, it is your money. I would find a new realtor. If you want to keep them, I would list all of the issues with the house and give them to your realtor (educate them). Let them know why you came up with the price you did. The overprice, the deck, the roof, cosmetic updates, and being the general to manage all of the repairs. See if they can get an acknowledgment from the seller that these repairs need to be done. Once they acknowledge the repairs then it is a negotiation about the cost. Get 3rd party estimates to justify. This should get you a lot closer to an agreement.
I am helping my parents find a house and we have found one with a real estate agent from the area. So, I was going over the offer we would like to make with her this morning and she told me "Cash" offer doesn't really matter. The seller doesn't care about that. Now to me that can't be right, don't banks/financing back out of deals all the time? Also tried telling her to put in certain terms to make it more appealing to the seller, like inspection amounts that we will cover if somethings wrong and won't back out but she said she has 40 years of experience and that doesn't matter either. Any advice will help. Thanks.
Cash offers will set you apart if they are cash offers with no inspection and appraisal contingencies. I see a lot of rookie buyers think they are being aggressive when making cash offers but they have more contingencies than your average financed offer lol.
So if you really wanna get aggressive go cash and AS-IS. If not, just listen to your agent. She probably knows what she is doing. If I saw an inspection contingencies that said something to the effect of buyer will fix X amount of something is wrong I would know I am dealing with rookie buyers who are likely gonna be a problem and a lower probability of getting to the closing table.
Cash does matter. It’s a big deal right now especially because cash means escrow can close faster than traditional financing. Have you tried reaching out to perhaps another agent? It’s hard to find agents who are willing to listen sometimes to buyers.
@Jacob Stokes Speaking for my market in Cincinnati, Ohio offers are completely dependent on the situation. If a sellers primary concern is getting top dollar, without concern for the properties ability to be financed or timeline, then cash is basically irrelevant. A good lender should be insuring that if a property appraises appropriately, and they have properly vetted a borrower, financing should not be an issue. It rarely is in my market, and the few terrible lenders out there that consistently have issues are well known by the agents who avoid them when possible.
Now you if have a home that is completely inhabitable and can only be closed with cash or hard money, the seller and listing agent should understand the value of a cash offer and should not be considering traditional financing offers anyway. Based on your post it does not seem to be the case, therefore cash ultimately is of little relevance, if it was my listing, waiving the financing contingency would in effect be the same, which is common in this very competitive market.
My advice for standing out if you are going in lower than market value, do a throughout inspection the first time you walk the property, bring your contractors if needed, and make your cash offer confidently, while waiving inspections. Put up a large earnest amount to catch their attention, and close quickly, that all together may make a difference, but at the end of the day, if the seller only cares about top dollar, nothing you can do matters, move onto the next deal.
@Jacob Stokes in a market like the one I am in right now.. sellers want cash or a loan that’s already been underwritten .. tough market right now for buyers.
Recently we have seen many all cash offers go "dark" never paid EMD, kept delaying, excuses that client was out of the country and now we see them back on the market at no fault to buyer. I guess you can say cash buyers have lost some appeal in that aspect, as now conventional loans with 20% down come up higher with zero contingencies.
In any offer, Cash WITH a 5-day inspection contingency is not favorable compared to Conventional Loan with ALL contingencies removed. In San Francisco Bay Area, most counties have all the disclosure paid up front by the seller, so we can make that decision, however some other places such as San Diego you don't get any disclosures up front and have to make an offer based on a 5-7 day inspection contingency. Gillian what is your market like?
@Jacob Stokes I am a broker in Chattanooga TN, and we are in a tight inventory market right now. In any stressed market, cash is going to be king. Especially if your market is in a low inventory with high appreciation rates because as the prices drive up there is always a concern with an appraisal contingency, which is usually foregone with cash. I do have investors that frequently use hard money cash and still ask for an appraisal contingency, which does not hold the same weight as offering with raw cash and no contingencies. If it is a brand new property and you are coming in around list or higher with little to no contingencies, there is no reason to believe that cash wouldn’t matter in this situation. It seems to be pretty consistent across the board that we are in a low inventory market on a national level. Unless there is another piece to the puzzle that we are missing, sellers almost always prefer cash with a quick close and it will always be considered the strongest offer as long as the price and contingencies are right.
Cash and minimal contingencies trumps financed offers to a certain monetary threshold. Question is what that threshold is for each seller. Could be $1000, $100, or $5000.
All you can do is offer where the numbers make sense for you and take things from there.
Seems to me like you have the pricing right, cash or no. 168 days on the market? List price is clearly not what you or other people think its worth.
"Be good and you will be lonesome" as Mr. Buffet (not warren) says. Tell the broker you have heard her, considered it and want her to make this offer. It is your decision not hers.
Submit it at the price you value, be polite, let it expire officially but let the seller's broker know you will still be interested if it doesn't sell. Cash, financing, whatever. This probably won't happen but you don't want to overpay.
By the way FHA and VA loans aren't even close to being the majority of the finance market and are usually much stricter in their appraisals than conventional so thats not a lot of leverage. Though at this price point they matter a little more.
I have had multiple clients lose out with "cash" even over asking price. the sellers are mostly greedy and all they want is that winning lottery ticket, they'd rather take their chances with the appraisal.
I have been making cash offer over listing price in past few months and still got outbid. The market is literally crazy now.Following this thread cause I’m also wondering if cash offer really had lost its advantage.
I am helping my parents find a house and we have found one with a real estate agent from the area. So, I was going over the offer we would like to make with her this morning and she told me "Cash" offer doesn't really matter. The seller doesn't care about that. Now to me that can't be right, don't banks/financing back out of deals all the time? Also tried telling her to put in certain terms to make it more appealing to the seller, like inspection amounts that we will cover if somethings wrong and won't back out but she said she has 40 years of experience and that doesn't matter either. Any advice will help. Thanks.
Does she not want to make money? Cash offers with little contingencies are almost always better. I've never had an experience where a seller has taken a financed offer over a cash offer at the same price.
@Jacob Stokes in my experience the only time cash isn't preferred is it's a low ball offer or there's significant sentimental attachment involved.
In the end the agent is working for you on your behalf (unless it's the sellers agent as well. ) Have the agent explain WHY it doesn't matter, they'll should be able to provide a why if they know and find out why if they don't. Otherwise they should present the offer and tell you the sellers response or you should get a new agent.
Everyone has their own priorities. Some people value speed, in which case cash is best. Some people prefer to maximize their cash even if it takes longer.
Seems unnecessarily complex. I cannot imagine sparring with a client that wants to make a cash offer. It's your deal and your agent's duty to facilitate. All things equal, a cash offer is preferred. Good luck!
Seems unnecessarily complex. I cannot imagine sparring with a client that wants to make a cash offer. It's your deal and your agent's duty to facilitate. All things equal, a cash offer is preferred. Good luck!
In our area (West Coast near SF) just about every property has multiple offers for years. Unless you can be the highest offering incentive for seller to stay for free while looking for another one. Cash or mortgage matters little. The listing agent knows what it takes so you should ask what price does it take to get the home?
To answer the question, CASH OFFER it's self has 0 meaning, value or power what so ever in todays market, that is a 2010 strategy and those books and strategies do have a shelf life.
What DOES hold value and power is the TERMS. Terms such as waiving inspection, no seller contributions for closing, or get creative and offer an over market listing offer via full price at closing and 5% via a 3yr not seller financed on monthly payments. Two points here, TERMS can be virtually anything NOT just the standard list, YES that DOES mean your term could be "we will deliver unto seller a fresh home baked pie every 3rd Sunday for 3 years from date of sale", YUP that is a legal term.
Simply put it is a SELLERS MARKET, so these old dusty strategies from a buyers market only achieve on annoying quality agents to point of dropping you, and signaling to a listing agent your a clueless buyer to not waste much time in engaging with counter-offers. You MUST use intelligent SELLER MARKET strategies and that either pay more, or have winning TERMS, it's just that simple.
Price & Terms, the TWO payments exchanged in EVERY Real Estate deal.
As an agent I've had the same experience as @Bruce Lynn. On my past fixers I would have flippers offer cash before even seeing it, just to see it and try to renegotiate or back out. If someone has gone through underwriting with the lender and the Seller isn't concerned about the appraisal, then yes, a Seller will take the highest offer.
As a cash buyer, if you really want to be competitive at a slightly lower price, then consider doing a non-refundable deposit. But even then, if the delta between the offers is significant enough, the Seller will most likely take the highest offer.
I agree with Rick. I have a couple of properties for sale up here in Burlington, VT and my realtor has had buyers call and ask if I would take “X” which can be 25% off asking. Of course it always includes them Educating us as to the failing real estate market. They’re too stupid to even realize that they’re insulting me.
i had to write a note to my realtor telling him the response from now on is no offers will be considered with first viewing the properties.