I don't know what the concessions were, but a $160k cash offer on a list of $170 is a 5% discount from asking. Even the original offer is not a low ball, unless the concessions were something like remodeling the entire house before closing.
As for cash not being better than financing, you are correct so long as you are sitting at the closing table. Some of my rentals, I bought when the previous buyer's financing fell through. I have lost a sale of my own when the prequalified buyer ended up not being able to close a loan even after several extensions.
It sounds like you're just in a lucky market. Anything that has multiple full-price offers on the first day, from qualified buyers, is either grossly underpriced or in a bubble market.
The subdivision is within a mile of multiple new medical buildings, some still being built. Also multiple new restaurants and entertainment facilities including Starbucks and chic-fil-a. The price appreciation is amazing. It’s not a bubble, just a developing market.
if it's such a future money maker.... why's it for sale?
If you are not countering lowball offers you are costing yourself serious cash. I work with investors that say all the time "if we can get it for 215 we should make some good money, let's put in an offer for 180 and see what they say."
That is not even that much of a lowball offer.. relax.
@Justen Ashcraft Might be low for your market, might not. Your list price is irrelevant. Market value (and not automated estimates via Zillow or elsewhere) is what matters. From your posts, it appears that your asking price is accurate to the market value. That being the case, why not counter at full list? I get that in some markets, list price can be 20-30%+ under what a property can sell for, not sure if that's the case here. But in a simple email your agent can say "seller won't consider any offers below list price, no matter the financing or lack thereof." Many times buyers will go up. Others will walk - if you are at market value and not pressed for time, that's their loss not yours.
Now, I've received offers on a $500k+ property in the$ 200k zone, all cash. Like oohhh, all cash, please bring me the briefcase and I'll sign the deed right now (sarcasm). That's an instant-ignore offer, and both the person who made the offer and the agent who sent it get added to my list of morons who I advise clients that, "if they are presenting an offer, I am 99% sure we can hold out for a week more and get at least 20% more than that. And if you don't believe me, let me show you some offers they made in the last year vs. what the property actually sold for."
Wow, that's really not bad. Like most are saying, that could've easily been pushed for $160.. I listed my house for $549k on Sunday and got a $525k offer that same day and saw it as a good sign.
Cash ALWAYS beats conventional loan if the price isn't too far off. More important IMO are if there are any contingencies with the $155k cash offer. Conventional deals fall through all the time; buyers can get cold feet and fall through, or they can screw themselves over by not being able to pay the DP to get the loan. If the cash offer had no loan/inspection contingency attached to the offer, then it is arguably stronger than the full price conventional offer. What i would have told my agent is to squeeze every dollar out of the cash buyer and flat out deny the concessions. IMO, accepting a 160-165k all cash no contingency offer would have been more preferable than a full price offer with contingencies.
Also, you'd be surprised with some responses you get from lowballing. My last 3 deals I bought homes at:
1. $595,000 originally listed at $675,000
2. $515,000 originally listed at $569,000
3. $570,000 originally listed at $660,000
The reason i got them was because i offered all cash, no contingencies and closed in 7 days. Most wholesalers will lowball offers all the time and hope they get responses from agents about 10 percent of the time entertaining their low ball offers. It never hurts to send a lowball offer, you never know what the selller/LA will say. In this business, I don't ever take anything personally unless my personal character is being attacked.
@Justen Ashcraft like our buddy Wayne Gretzky once said “you miss 100% of the shots you never take.” Low ball offers are part of the real estate game. You can’t get emotional about real estate, it’s never worth what you think it is! Only worth what someone is willing to pay for.
My favorite real estate motto is “some will, sone won’t, so what, someone else is waiting.” On to the next offer/deal. In any sales business, you have to continue moving forward.
But many offers do make for great stories at parties!
Originally posted by @Justen Ashcraft :
Sometimes I think people actually believe the buyer is walking in with a briefcase of cash :(. If that’s what some of you think, please do some research .
Some years back, I was selling one of my rentals. The broker, who owned the rental next to me said she had a few "cash" buyers. Here in NY, I ran across some foreign buyers who has cash in the bank for such transactions, In fact, I bought a rental at a foreclosure sale for $200K, and another buyer bought a similar REO 2 doors down for $150K all cash.
Turns out the cash buyer the broker mentioned is a jeweler, who deals in "real cash" in suitcases no less. The difference here is doing part of the transaction on the books and part off the books, The rental was going for $475K, so it's $100K in a suitcase, and the remainder on the P&S contract for $375K.
I was curious enough to meet the buyer and go through the preliminary discussions. My wife and I had good W2 jobs, 40lK matches etc,. and wondered what we'll do with $100K in a suitcase. Turned out he had a number of $100K suitcases and the broker advised they closed on a similar deal already within the past several months. Funny thing is, during the meeting, it was discussed that he can would do the deal with two suitcases of $100K each.
Later on, when I was buying businesses, I learned certain businesses that deal in cash will consider a suitcase full of cash as a down payment. And NO, I didn't sell the rental for a suitcase of cash. Saved a few dollars in capital gains, but in a hot market, the $25K I'll save, someone will just offer $25K more if the $25K is that important to me.
While I'm on the subject, a co-worker of mine, who owned real estate in upstate NY mentioned that he's done some real estate transactions where he received actual cash as part of the down payment.
From personal experience, I would not ignore those full price offers to long.
Please PLEASE do not consider the Zestimate as a tool for pricing your home. They are often times tens of thousands of $ incorrect. If I could teach people only one lesson as a realtor, it would be to not even look at the Zestimate.
Other than that, I agree with what these other people have said. Cash is king because it often means a quick closing and no nail-biting about whether or not financing will fall through. It’s hard to not be emotionally invested in this business for sure.
@Dustin Frank totally agree with you on countering. It is ALWAYS a bad idea for a seller not to counter no matter how bad/low the original offer is. They may just be fishing for a low price but also willing to pay the list price. You'll never know if you don't counter. Ego is the enemy.
I may agree with most.
What does the appraisal or CMA say about the home value? You need to present that document to the buyers to show your expectation. I have had an AS IS sale from 2005 on 100% transactions. If the condition is below one's expectation do not bother to submit as sellers here are not interested in contingencies and conditions. Just present a clean offer with the conditioned factored in the price.
After a home has been on the market for awhile fewer people will be opt to show interest. Time is of essence during marketing.
What’s up Justen Ashcraft, here is my thought. It sounds like the gentleman didn’t spend enough time with you to find out your pain points. Maybe he didn’t ask you the right questions. I’m assuming he just gave you a number without building enough trust with you. Because, if he did you may have countered the offer. The point I’m trying to make is majority of the time it’s not about the money.
If the cash offer will allow you to close this year, I would seriously consider it. You could sell 1 in '17, the rest (3 more?) in '18.
I'm selling my 3rd single-family this year, but forced the closing out until after Jan 1. Do you know why?
If you sell 4 houses in the same year -what will that do to your tax burden?
Tax planning is huge. Don't be ignorant and wonder why you're paying medicare tax on top of cap gains next year because you sold 4 houses in the same calendar year. Spread 'em out.
@Justen Ashcraft first of all it's not personal, just business. Second zillow sucks for comps. Do you always pay full price for everything? Re is just like any other commodity. It sounds like you're getting a good amount of showings so be on your way and be happy.
2 condos for sale 145k each
We offered to buy both cash for total of 200k for both
They countered 140k each
My wife insisted we counter at 210k for both
Offer was accepted
THIS is why people low ball, because sometimes it works
this week.. my wife lists a fixer in Portlandia for 287k.. next day 3 offers.. one for 220k.. one full price one 3k over full price.. she counters all three with highest and best.. low baller never responded .. one of the higher offers got the property..
For me as a seller never bothers me what someone offers.. If I like it fine if not just reject.. or many times if its an investor low balling I simply don't respond at all.. just throw it away.. they get the hint then.
but we are in a sellers market right now in most areas.. so enjoy the good times its not always like this.
Originally posted by @Justen Ashcraft :
My wife and I just listed the last of our sfr’s in Gwinnett County. It’s in a very up and coming neighborhood with a new hospital less than a mile away etc. we listed it below the “Zillow” estated 176k for 169,900.
We’ve had plenty of interest, but haven’t accepted anything as of now. My real estate agent says you have an offer at 155 and they want this and that and this... “cash buyer”. I told him not even to respond with this lowball crap.
We’ve had full price offers already, but will wait until tomorrow mornings showing to ask for highest and best.
I’m not a flipper, but is this how it goes with investors looking to buy an investment property? I guess people will just throw junk out there hoping it will stick.
Ye, I do understand that this is what most of us do, lowball, but that’s an embarrassing offer even though the percentage isn’t that far off.
if % isnt that far off how is it embarrassing.
9% plus concessions on the Dorset day of sale is laughable.
We’re under contract for full list, with a cash buyer. We will be paying for a 1 year home warranty ~$540, and a termite letter(free)
I find the opposite to be true.
Investors selling their properties think their properties are worth gold!
If an investor is buying a property the numbers have to make sense.
I offer purchase prices based on me making 10% ROI... AFTER all expenses, including my mortgage.
These deals are hard to come by now so I find off market deals to offer on because there’s a lot of dumb money being thrown around right now.
Respect your opinion but I personally don’t believe that was a low ball offer.
Even if it was a low ball just decline or make counter offer if you had no other offers.
For any beginners reading this don’t be discourage making low offers, make offers that make sense to you and know your market.
I’m in the middle of selling my second home, first time ever I’m selling a property.
I decided to put property in market while doing renovations, renovations taking longer than expected but I received 2 low offers. I was happy to receive offers even though they were low, it was a good indicator that people are interested in my property. I was in no hurry and told my agent to decline offers. I figured once renovations are completed will have better chance in getting my asking price. Just this week I received cash offer for my asking price.
If I was in a rush I would have made counteroffers on my initials offer but because I wasn’t I just waited. As a seller I was happy to receive multiple offers, depending on individual situation they will accept, decline or counter.
For any beginners don’t be discourage to make low offers, you never know. If I see a property that I like that’s been in the market for a couple of months, my initial offer will be a low ball as some people might call it and I’m sure if the seller has received no offers it will be welcome news for them.
I'm super new to the real estate game but I know one thing in life is true. Many times people get offended because of something that someone else says or does. I find that the majority of the time their intention isn't to harm or offend. Unless they are personally attacking your character, I would say try not to take it personally. Good luck and hope all goes well for you!
The buyer didn't spend enough time with him building up trust because the seller has the property listed with an agent .
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