Cant buy a house
Real Estate Investor · Fenton, MI · Member since 2008 · 946 posts · 153 votes
I am working with a good Realtor and I make offers well above asking. I just lost out on another offer I made. It will be interesting to find out the winning bid upon closing. The house before this I made a cash offer with no contingencies and, an offer $1500 LESS than mine was accepted instead.
Is there some "inside track" I am not aware of?
I have NO contingencies. Many of you have mentioned a deposit. The sellers are not even mentioning a deposit. You simply submit a bid, they accept or deny and you close on the house. Good faith deposits are more for owner occupied homes. I am after investment properties which close upon acceptance. The problem is I need to learn a secret handshake or some such thing to get my offers accepted.
The seller may not be mentioning a deposit but you said that the issue was the sellers feel that there is a possibility you will not close. So your offer of a non refundable EMD gives them what they ARE looking for. If you have no contingencies and you have put up an EMD of say 25% of the purchase price, then were you to back out the seller would be able to keep the money. That gives them the confidence that you will close.
And your statement about good faith deposits (earnest money deposit) being for OO homes is inaccurate. I have never made an offer with anything less than 5K EMD, and the last two REO purchases I have had requested 10% EMD in their counter offers.
Ok, I just asked my Realtor about it and he told me deposits are not needed. The SELLERS dictate in their instructions that they ONLY want a "purchase agreement," and "addendum." They do not even want a proof of funds yet. He has my proof of funds on file. There is literally no way to give them a deposit until 48 hours of an offer being accepted.
Maybe this is a local thing in Michigan, but that seems like how it is done here. I know he is equally frustrated with my lack of offers being accepted.
@Mark Forest This thread has taken a weird turn. Everyone is giving ideas that work (in their experience) and you are spending time and energy defending your current strategies.....which are not working.
Is is possible your agent isn't the best for what you need to do right now? Is it possible that you need to go above and beyond what is typical for your area? You can submit anything you want with your offer. Who cares what's typical or customary. Obviously your offers are not getting the attention or trust of the sellers. Do something different.
@Mark Forest This thread has taken a weird turn. Everyone is giving ideas that work (in their experience) and you are spending time and energy defending your current strategies.....which are not working.
Is is possible your agent isn't the best for what you need to do right now? Is it possible that you need to go above and beyond what is typical for your area? You can submit anything you want with your offer. Who cares what's typical or customary. Obviously your offers are not getting the attention or trust of the sellers. Do something different.
Submit a 5-10% EMD check with your next offer. They will find a way to accept it.
Have you asked your realtor his/her thoughts on why your offers are not being accepted?
Ok, I just asked my Realtor about it and he told me deposits are not needed. The SELLERS dictate in their instructions that they ONLY want a "purchase agreement," and "addendum." They do not even want a proof of funds yet. He has my proof of funds on file. There is literally no way to give them a deposit until 48 hours of an offer being accepted.
Maybe this is a local thing in Michigan, but that seems like how it is done here. I know he is equally frustrated with my lack of offers being accepted.
Steve- I agree with this I have gotten two Fannie Mae's accepted with out presenting a physical check until after the offer is accepted, however it is written in the PA what the EMD will be, 10% for cash offers. From my experience I have gotten rejected because my offer was too low, got into multiple offer round and lost and the few that I did get I called the listing agent (I am a realtor) and talked with them because they can try to work it out with the asset manager.
I also talked to a relative who is a Realtor. She said in my area if it is a bank foreclosure they will not accept a deposit. They have their own methods. If the seller is a private person a deposit can be accepted. This is from a neutral Michigan Realtor.
@Mark Forest This thread has taken a weird turn. Everyone is giving ideas that work (in their experience) and you are spending time and energy defending your current strategies.....which are not working.
I am simply trying to be successful using the methods as they really are. I am tempted to try one posters idea of putting in an offer with the same company that listed the house. However if my Realtor sent me the listing in my e-mail I feel obligated to use him unless there is some other way to get house listings.
@Mark Forest maybe I'm not understanding the process there in MI, but in my area the deposit is part of the offer. Some others mentioned sending them the physical EMD check, however usually in my experience the deposit is written in the offer then deposited with the title company after acceptance by the seller.
Say I have a property I'm offering $50K on. I write up the offer for the amount and under the line for earnest money write $5K and I state 24hrs or whatever (I think state default is 72 so I always make it faster than that). Then along with my offer I insert the page with my bank screen shot showing the funds needed to close sitting in my account.
What is there in the process that a bank "can't accept" they get all the papers in the stack, if they choose to file 13 your POF so be it, but they received it at least. As to your EMD there's nothing for them to do but accept your offer and have you send the money to escrow. Within 24 hours they'll know if they have money from you which gives them every confidence you'll close. If they title doesn't receive your funds then they can move on to the next buyer and have only lost 1 day at most.
If you are missing out like that and as noted prior, maybe your offers aren't even getting in front of the Seller, so either have your Realtor as your Buyers Agent present the offer in person to the Seller, or start going direct to the Listing Agents and see what kind of success you have then...just my opinion !
@Mark Forest This thread has taken a weird turn. Everyone is giving ideas that work (in their experience) and you are spending time and energy defending your current strategies.....which are not working.
I am simply trying to be successful using the methods as they really are. I am tempted to try one posters idea of putting in an offer with the same company that listed the house. However if my Realtor sent me the listing in my e-mail I feel obligated to use him unless there is some other way to get house listings.
Other people who have bought and sold in MI have told you that there "methods as they really are" include deposits.
I'm not sure why you are so resistant to the idea. What can it hurt? It seems much more likely to me that there is some deficiency in your offers than that there is some sort of shadowy conspiracy of insider deals.
Ah, I thought I remembered you. You're the same guy who said it was impossible to buy anything if you included an inspection contingency, because no seller would accept it. And who argued with electricians who answered one of your questions about an electrical issue.
I'm a stubborn guy myself, with strong opinions about the right way to do certain things. As a result, while I often ask for advice, I don't ask for advice about things when I know I am not willing to listen to that advice. Why bother? So whenever I do ask for advice, I am willing to listen to it.
People, including Michigan real estate professionals, are telling you that EMDs are in fact common in your area and will strengthen your offer. You should consider listening.
Ah, I thought I remembered you. You're the same guy who said it was impossible to buy anything if you included an inspection contingency, because no seller would accept it. And who argued with electricians who answered one of your questions about an electrical issue.
I'm a stubborn guy myself, with strong opinions about the right way to do certain things. As a result, while I often ask for advice, I don't ask for advice about things when I know I am not willing to listen to that advice. Why bother? So whenever I do ask for advice, I am willing to listen to it.
People, including Michigan real estate professionals, are telling you that EMDs are in fact common in your area and will strengthen your offer. You should consider listening.
I can assure you I can be more stubborn and think I know the right way to do things. I win. Ask my husband.
But I don't generally ask advice or for suggestions unless I'm in a brainstorming mode.....where I'm actually open to considering the opinions of others.
What's weird about this thread is that we are talking one agent's opinion. There are tons of ways to do things effectively and legally that don't conform to ONE agent's opinion.
My agent recently listed a property (not mine) and got 3 full price offers after the 1st weekend. 1 investor cash buyer, 1 conventional buyer with 20% down. And one buyer that was FHA and wanted/needed assisted closing costs of about $5K. As part of her offer, the FHA buyer sent a note explaining her situation (single Mom with fiancé willing to adopt her child) and a video showing who they were and how this house would make their life better. Her agent managed to get that stuff in front of the listing agent (my agent who is a total sucker for that kind of thing) who then put it in front of his clients. The sellers were not motivated and we are in a hot market. They accepted her offer.
Do what you gotta do.
People, including Michigan real estate professionals, are telling you that EMDs are in fact common in your area and will strengthen your offer. You should consider listening.
Actually the only Michigan Realtor contributing to the thread agreed with my original comment. As does a second Realtor I contacted. The offer we discussed in another thread specifically said "no inspection, cash only."
At first I wasn't sure this was a real question. If there are 5 offers for the same amount, all cash, all quick close......do you think the seller just flips a coin? I'll tell you my experience. My agent and I go over the offers and we go over if we know any of the players....any of the buyers, any of the buyer's agents (or any of the hard money lenders when present in the offers). If there's a buyer's agent who is a jerk or who is totally unknown, we eliminate that offer. Just like that.
SO many variables, the cash offer of which may not even be the most important.
Do something different. Experiment. Make offers directly to the listing agent. Or use a different buyer's agent. Or submit EMD money. Or submit proof of funds.
Come back here after you've exhausted all the variables. :)
People, including Michigan real estate professionals, are telling you that EMDs are in fact common in your area and will strengthen your offer. You should consider listening.
Actually the only Michigan Realtor contributing to the thread agreed with my original comment. As does a second Realtor I contacted. The offer we discussed in another thread specifically said "no inspection, cash only."
She agreed it was frustrating. Then explained how her offers include earnest money.
Cash offer "A". Yours.
Cash offer "B". Like yours, only with money up front as an EMD,and a real and recent POF.
"B" is better. Therefore "A" is deficient. And "B" gets the house.
Or else the world is conspiring against you. One of the two.
Hi @ Steve Might, It appears that you want to be right instead of buying a rental property, is that correct? Many knowledgeable investors/posters gave you valuable information on how to get your cash offers accepted. The state of Michigan is not some strange island located in the middle of some ocean. I will help you try to get unstuck. First, get a different real estate agent, you are not obligated to stick with this particular agent( maybe they are too inexperienced in presenting offers). Second , after you get a new real estate agent, present a realistic cash offer( 70% of after repair value minus your repair costs), a sizeable earnest money deposit of 10% of of your offer, no contingiencies, close within two weeks. If they won't accept that deal. Go to the next property, it is that simple, there is always another deal. As others stated before , please try something different, and report back to us, so that we can help you further. Also you may want to contact Rob C. , he buys quite a few properties in Michigan.
I always appreciate advice, but after consulting several local Realtors they all seem to agree that when an offer is presented to a bank their procedure is simply not to take a deposit till after a bid is accepted.When it comes to private sale offers you are all right in that a deposit can possibly be tendered.Those are the facts in my area. I am happy that many of you live in places where you have more flexibility. I can only work in the parameters I am given. Thanks to all who contributed.
I always appreciate advice, but after consulting several local Realtors they all seem to agree that when an offer is presented to a bank their procedure is simply not to take a deposit till after a bid is accepted.When it comes to private sale offers you are all right in that a deposit can possibly be tendered.Those are the facts in my area. I am happy that many of you live in places where you have more flexibility. I can only work in the parameters I am given. Thanks to all who contributed.
Steve:
Just humour us. Send a sizeable EMD with your next offer (25%) and see where it goes.
I always appreciate advice, but after consulting several local Realtors they all seem to agree that when an offer is presented to a bank their procedure is simply not to take a deposit till after a bid is accepted.When it comes to private sale offers you are all right in that a deposit can possibly be tendered.Those are the facts in my area. I am happy that many of you live in places where you have more flexibility. I can only work in the parameters I am given. Thanks to all who contributed.
Thank God the founding fathers chose to work outside the given parameters of their situation.
I always appreciate advice, but after consulting several local Realtors they all seem to agree that when an offer is presented to a bank their procedure is simply not to take a deposit till after a bid is accepted.When it comes to private sale offers you are all right in that a deposit can possibly be tendered.Those are the facts in my area. I am happy that many of you live in places where you have more flexibility. I can only work in the parameters I am given. Thanks to all who contributed.
I think perhaps that our suggestions were misunderstood. We are not talking about having the lender/seller "tenderi" the EMD. Send as much "supporting" documentation for your offer as possible. This includes proof funds documentation and an EMD check (or copy of) that are referenced in the purchase offer. Put them in an addendum to the realtor board contract if that's what it takes. You want to provide proof of your viability as a buyer and to get it in front of the seller. This does more than get the attention of the seller. It also gets the attention of the REO agents in your area. If they keep seeing your name and statement and checks, they'll notice. Of course your offers have to be competitive.
You mentioned "making bids"...some banks will take a lower offer if the buyer is using federally backed financing. This holds especially true on Fannie Mae homes. I've seen them go for as low as 15k below asking as opposed to full price offer if its federal money/loan. You might have to re-think your purchasing strategy.
not that I'm an expert..I think that those people have already chimed in but I've closed only 6 properties in Michigan. ..All included an emd ...To tell you the truth the emd wasn't even my idea...it was requested by my agent with my offer...like it was a normal understood procedure. ..it let's them know that you mean business....On my last offer I put in a large deposit. ..why not..I planned on buying the property anyway..It must have made my offer look more appealing because they accepted it....
not that I'm an expert..I think that those people have already chimed in but I've closed only 6 properties in Michigan. ..All included an emd ...To tell you the truth the emd wasn't even my idea...it was requested by my agent with my offer...like it was a normal understood procedure. ..it let's them know that you mean business....On my last offer I put in a large deposit. ..why not..I planned on buying the property anyway..It must have made my offer look more appealing because they accepted it....
This post says it all. It nicely and convincingly illustrates what seems so completely clear and obvious to everyone trying to give advice on this thread.
I think @K. Marie Poe hits the nail on the head - it looks like the OP as well is agent misunderstand the EM concept. You do NOT submit a briefcase full of cash along with the offer. Instead, you submit a commitment (often in the form of a copy of a check) that you are ready to hand over that briefcase of cash as soon as (or within 24-72 hours of) the offer is accepted. This assures the seller that they will lose at most 24-72 hours should they run into a tire kicker that is not going to perform. As opposed to have the property tied up and get nothing in return if the buyer bails.
So, all it is is a commitment to pay EM on acceptance of offer - if the offer doesn't get accepted, then no money is transacted. Very simple and powerful.