Lender · Tampa, FL · Member since 2014 · 543 posts · 168 votes
Why would the price have not been negotiated up $2.00 to $754,500 or down $98.00 to $754,400, a round number?
Do you know how much chaos and extra time and effort throughout the loan process correcting the sales price and possible delays such a number can cause on the Mortgage side?
To all Investors: do yourselves and everyone on the mortgage as well as on the title side a huge favor and simply round your sales price up or down to the nearest round 100 number.
Real Estate Investor · Palm Beach County, FL · Member since 2017 · 3k+ posts · 2k+ votes
8y
I personally don't think the majority of investors are too concerned with their purchase/sale price being "convenient" for a mortgage broker they just want the deal locked in at the best possible numbers that work for them.
Residential Real Estate Agent · Tampa, FL · Member since 2014 · 177 posts · 122 votes
8y
I always knew mortgage people sucked at math so this is no surprise! Seriously though, this sounds like something an REO bank would do on a short sale approval. Sometimes people take formulas a little to seriously.
Jews believe 18 is a lucky number so I have seen things in multiples of 18 (36,54,72,90) but that isn't the case here.
Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
8y
This is a common negotiating tactic especially if this is the second or third number given, it is meant to give the other party the impression that this is your final offer (even if it's not). It may not be pretty for the mortgage company etc. but the research says it works as a negotiating tactic.
Lender · Tampa, FL · Member since 2014 · 543 posts · 168 votes
8y
I'm completely aware of the tactic as $99,995 or $9,9999.99 looks a lot better than $100,000 and is why everything at Walmart and on used car lots are priced this way.
But on 3/4 of a Million dollar home, a $2.00 difference in a negotiating strategy is not going to kill a deal, but given the problems it can cause on the lending side, it's foolish to actually settle on such a final number.
A buyer's realtor or Listing realtor can always show how smart they are after there is a deal by saying...
..."To better insure a smooth mortgage loan process for the buyer, I'll pick up the $2.00, so we can round up to $754,500 even."
Real Estate Investor · Palm Beach County, FL · Member since 2017 · 3k+ posts · 2k+ votes
8y
I personally don't think the majority of investors are too concerned with their purchase/sale price being "convenient" for a mortgage broker they just want the deal locked in at the best possible numbers that work for them.
REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
8y
If they ended it in 11 think of the toner they could save across all of the documents too!
On a serious note. I am unaware of the chaos and extra time. What actually are those issues, is it a software problem? Calculation problem? Where is the extra time spent? I am asking because I just today sent in an offer for $125,820 we ran comps, that number was it and we fired it off. What sorts of issues does it cause?
Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
8y
@Account Closed this is a different tactic than $9.99 at Walmart, it is essentially saying to the other party, this is my final offer take it or leave it, without saying those words. It may or may not be true, but that is how it is used. It ends negotiations one way or another, and that is why people do it, because it messes with the head of the other party, and makes them think things that may or may not be true.
Lender · Tampa, FL · Member since 2014 · 543 posts · 168 votes
8y
I know that some still look at obtaining a mortgage here in 2018 as a minor, inconsequential and trivial task after a deal is negotiated on the real estate side, but for the rest of America, who need to obtain a mortgage, they know or will know, it's not a cake walk.
There are humans that make human errors throughout the mortgage loan process having to fill out many documents to complete the different tasks needed to obtain the CTC. Therefore the likelihood of an error being made through out the loan process is much higher when there is an oddball sales price.
...or
don't take this advice, let it ride and complain and moan when there are costly closing delays.
Lender · Tampa, FL · Member since 2014 · 543 posts · 168 votes
8y
Amazing how 100% of mortgage industry people will agree 110%with what I'm advising Investors to do to help ensure a smooth closing and completely avoidable delays over such a simple, no brainer action of rounding up or down.
Residential Real Estate Broker · Belvidere, IL · Member since 2016 · 13 posts · 7 votes
8y
Often the final sales price includes a price reduction due to needed repairs. Those repair bills are collected from estimates and can then be deducted off the purchase price to give you an odd final agreement number. I see it all the time. If there is no need for closing cost reduction, many will take it off the final purchase price. So maybe the agreed price was $766,000 and there was a $11,502 roof that needed to be replaced. Or maybe the roof cost was twice that and they agreed to split the cost as a price reduction.
Lender · Tampa, FL · Member since 2014 · 543 posts · 168 votes
8y
Of course you see it all the time, but it's a simple, no brainer adjustment to the nearest 100 to avoid potential delays.
But these are not delays that realtors or consumers hear about, they just experience the end result in closing days delays that were in part do to the time and effort it took along the loan process to get an appraisal changed, a title commitment revised, etc.
On the mortgage side, we ALL know of the issues those oddball final sales price amounts not rounded, can mushroom into!
Ask any Mortgage industry or Title industry person if what I'm stating is fact or not.
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
8y
@Account Closed that this hardly seems like a real problem. You are just plugging numbers into software. It makes no difference what numbers you enter. Entry errors can happen just as easily regardless of the number. There are many uneven numbers entered in the mortgage process, such as insurance and taxes, just to name two.
I will offer some advice. Lenders are a dime a dozen. The ones who do well don't make mistakes. If you are making mistakes and complaining to your customers about uneven numbers, it will hurt your business. I hope for your sake you are just venting a pet peeve here on BP and not sharing this with your customers.
Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
8y
Chaos? from changing a number?
Using non-rounded numbers is a common and effective negotiating tactic.
If the alternative to using a technique like this is giving up money to make the lender's life easier, just fire that lender. The lender is supposed to make MY life easier, not the other way around.
Everyone needs to vent occasionally though I guess ;)
Lender · Tampa, FL · Member since 2014 · 543 posts · 168 votes
8y
@Matt K., I'm not saying that you should not bid with a round number, though $2.00 on a 3/4 million dollar home is ridiculous, but when the deal is reached and before all is signed, simply adjust to a round number.
This is about as narrow minded of an argument as one on wanting the qualification letter to match a lowball offer!
Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
8y
Why would either side open it back up for negotiations once a offer is accepted? If I have to put in 407,934.73 and it's accepted why would I change it ? I mean I'd of loved to get it at 400, 405, 407 even and I'm sure the seller would of loved 408 or even 410 etc...
I'm bidding against (in theory ) other people, what happens when you bid 407,900 because it's an easy number and I won the bid because of 34.73? I guess the counter to that would be an easy number is also 408... But to an investor that probably exceeded the max amount they'd of paid...
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
8y
Originally posted by @Account Closed:
@Joe Splitrock, okay, if you're so sure of your view is right, then let's email 10 random lenders and get their responses, you can pick the lenders.
Send me a PM and we'll both be on an email with the question sent to 10 lenders and we can report our findings here on the thread.
Hundreds of lenders interact with Bigger Pockets. I am sure some of them will chime in with their opinion. Randomly e-mailing lenders to ask this question sounds borderline crazy and is a waste of our time. I will make my offers for whatever number makes sense and if my lender is too sloppy to key a number in correctly, I will find a new lender.
Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
8y
Originally posted by @Account Closed:
@Joe Splitrock, okay, if you're so sure of your view is right, then let's email 10 random lenders and get their responses, you can pick the lenders.
Send me a PM and we'll both be on an email with the question sent to 10 lenders and we can report our findings here on the thread.
Wait.......
wait wait wait
Isn't the whole point of this thread to get investors to stop wasting lenders precious time??!?! Now you're gonna go waste 20 lender's time to ask if rounding numbers is a waste of time??
Lender · Tampa, FL · Member since 2014 · 543 posts · 168 votes
8y
Not about wasting lenders' precious time, because #1 a lot of their employees could care less if a loan funding is delayed. #2 they're not the one's with all their belongings in a truck headed to another city.
It's about avoidable delays in the loan process, whether it be thru Bank of America or ABC Mortgage Lender, that could have a costly impact on the "Consumer/ Borrower" by simply doing a simple round up or down of a few bucks.
Real Estate Investor · Palm Beach County, FL · Member since 2017 · 3k+ posts · 2k+ votes
8y
If you can't handle $100,503 and it must be $100,500 in order for you to not delay your clients closings then perhaps what you really need to do is re-evaluate either your math, software, business model and/or career choice.