This is a friend/co-worker of mine. They are just getting rid of their house. It's a STEAL. Probably 25% below market value if not more! I tell him, sight unseen, "I want it, sell me that house!" He says he has ppl looking at it but he won't say anything and he won't shake any hands and asks us to come look at it afterwards.
We show up and we say, "yep, we are both 100% in... I just need to follow up with the bank and secure the money.
He texts me this morning to say "sorry, the other people are showing up with cash." The deal is not done and I begged him to not sell to them and that it wouldn't take long to get this deal done. They actually have stuff in there to move out and now will have to hustle to get it all moved into a POD temp storage container.
He claims it's his wife that is pushing... I'm just trying anything to get him to give me the time I'd need to let the bank approve me.
Cash is king.
Maybe waive any contingencies? Buy it as-is and will not ask for any repairs? Maybe throw in a little toward his closing costs? Maybe just offer a bit more than the cash offer?
I personally advise my clients to get an underwritten pre-approval far before we start looking for houses.. That way we can close in 2-3 weeks and it's just as good as cash... Can't tell you how many offers we beat out even though we were lower because it was fully underwritten.
Dont get personal. Know your max offer and stick to it. You dont want to start chasing deals. Its business. Dollars and cents. Move on to the next one.
Cash, with big earnest money deposits, is indeed king. Sellers know that all kinds of things go wrong with deals involving borrowed funds. Just think, if you were the seller, which deal would you take? We have good old sayings because they are accurate - A Bird In the Hand Is Worth Two in the Bush.
Yeah, I wasn't looking for a house... it just fell in my lap.
We decided to jump on it and the rent from our current place would cover the note.
This is As-Is, no contingencies... just needed to get money from the bank. Like the last poster said, one in the hand.
He mentioned his wife believes things happen for a reason, so I tried to play that angle with how things came together to for me to find out that deal was there. No response yet. Hopefully he's still talking to her. I am not hopeful though. I think it's done.
Maybe they offered more money and he just doesn't want to start a bidding war. He really just wants to get out of the house with no hassles.
Cash talks and BS walks. It's just a saying that floats around in the marketplace.
The cash offer you would need to see the TERMS of the cash offer. Cash is great but are there any terms to it??
If I was the seller and someone said to me here is a cash offer and proof of funds but I have 10 contingencies in here and very little EM then I am not excited about it. I have no access to their cash if they do not perform.
Now you could put up say 10k nonrefundable EM. This way the seller makes 10k whether you buy the house or not. Big risk for you if your financing is not approved. The other issue is time. How fast does the seller need to sell??
If the all cash buyer is giving big non-refundable for any reason then really nothing you can do. If I was getting a sure thing and even if that sure thing didn't happen I got fat EM it's a no brainer versus a friend who wants the property but needs a bank to approve with all these conditions. You could try to up your price above the asking as maybe the cash buyer is a lower offer. If the spread of the cash buyer to the financed buyer is small then usually the cash buyer wins. If the spread is larger and the cash buyer will not go up and financed buyer offers big non-refundable EM then they could win.
It's all situational on what the seller wants and holds the most currency in.
No legal advice given.
Forgot to mention this buyer competitor might not be a cash buyer at all. Many claim this but it is a disguise with a pre-approval from a hard money lender. Those are worthless as the HML has a bunch of contingencies to getting the money and it's a loan. The buyer might also say they have cash but it is coming from liquidating certain investments. Those investments might not appraise out to pull the cash from and the deal falls apart. As a seller I want to see a bank statement the last 30 days from the individual buyer showing they have total funds to purchase.
If it's a corp they have to be the controlling officer and decision maker to bind them and the company to the contract. I want to also see the money earmarked and set aside for the transaction.
My understanding is that it's the daughter of the lady that lives across the street.
All of this is As-Is, no contingencies.
The deal is good enough that anyone would jump on it. ;(
Since this is your friend and co worker I would (advice from an amateur investor) approach the situation with care. You already made it clear that you like the property, can secure funds, and are ready to make the deal happen. From experience in other business deals with friends (not real estate) car sales, transport, and network marketing, friends will clearing shows you signs of not wanting to do the business deal with you. Whether it's because their uncomfortable with you making money off them or something else. Present the offer and let them come to you. If not, you run the risk of losing your friend and having an awkward co worker.
Yes, I've managed to aggravate him. :)
I just needed to know if I needed to go forward with setting up money or if there was no window for me at all.
He said, "I told you, I told them I would accept the cash offer and if something changed, I'd let you know."
This is a company I do consulting for, so I'm not in there daily and though, I COMPLETELY agree that I could make things awkward, it will all be water under the bridge given a normal amount of time.
Thanks for everyone's advice.
I certainly learned some lessons. I should have brought some cash and a purchase agreement with me when I went look at the house. Thought it might not have been rock solid, it might have been just that little bit more of an edge that would have kept him from taking their deal until ours fell through.
Won't make that mistake again!
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