Have submitted 6 offers so far....
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Rental Property Investor 路 Los Angeles, CA 路 Member since 2018 路 8 posts 路 19 votes
8yYour low down-payment loan is most likely the issue. In hot market, you are against 20-30% down offers (or even cash offers). For sellers, 5% down offer is too risky because it is most likely to fall out of escrow due to low appraisal, problems found during inspections that may impact the loan guidelines... In other words, any little thing can derail the process when a bigger down payment provide a safety net to counter any problems that may rise during escrow ( and problems will happen for sure).
But don't lose hope, a seller may decide to take the risk of going with a lower down-payment offer as long as it has other benefits: Higher price, short contingencies (or no contingencies), short escrow period, hard money upon offer acceptance....
Cy
109 Replies
- Real Estate Agent 路 Astoria, NY 路 Member since 2016 路 60 posts 路 55 votes8y
Originally posted by @Jay Hinrichs:
Originally posted by @Daniel Akerman:
@Terry Lao you seem to be the one not paying attention to the OP or the things being posted here. @Vivian O. clearly stated in her 3rd post on this thread, she IS PRE-APPROVED for a loan. I'm not sure why you keep harping on the pre-approval, since she mentioned at least once, if not more, that she is already pre-approved. And you keep mentioning FHA when the nature of her loan has almost zero impact in the particular situation she's having a challenge with. Additionally, she's working with a Realtor, and any Realtor worth their salt is going to make sure their client is qualified to buy -- so clearly she is qualified.
Vivian, I suspect that whether you go FHA or Traditional won't make much or any difference with your particular issue. Your issue seems to be where you're looking for your deals, and how much competition you have. So, as others have mentioned, you need to look at how you can avoid that competition.
If you are buying this property purely as an investor for cash flow, then I doubt any personal letters will make an impact. I'm not a big believer in the whole personal letter thing, anyway. You don't write a personal letter when you haggle over a used car do you? You don't write a personal letter when you buy something at an auction either -- which is pretty similar to buying a home in a competitive market like yours. If I'm a seller's agent, I kind of laugh at the personal letters and counsel my client to ignore the letters and focus on the STRONGEST BUYER. A distressed seller, in particular, won't give a damn about how sweet you are or how much you love the house -- they're in trouble and need as much money as possible as quickly as possible and that's all they care about.
I think the key issue is how/where you're finding these properties. The MLS is going to have the widest possible exposure and the most buyers to compete against you. If everyone desperate to buy a home sees the same deal, it's only natural that you're going to be in a situation with 30 bids -- and you'll lose every time because an end user will almost ALWAYS beat out an investor.
You need to be finding off-market properties and FSBOs that not many people will be looking at.
You might consider changing agents and working with a LISTING AGENT who focuses on listing short sales, pre-foreclosures, REO and foreclosure properties. An agent who does that already will have the mechanisms in place for finding off market properties, so you don't have to spend the time and money to do it. Now, you'd be working direct, which opens you up to some risk because you'd be working with the listing agent, or possibly in a dual-agency situation. But if you're aware of that and comfortable with it, you may have more luck finding a property you can afford without having to battle against 30-40 other buyers.
depends on the Market the personal letters really work in the portland market.. the sellers are not so hard nosed and tend to be very caring if they are older owners that have lived in portlandia for any number of years.. just watch the TV show Portlandia its reality I know its a comedy but it is the way it is in that market.
I can see in NY it being different as there is a thought process that new yorkers are more matter of fact..
I could see this working in Minneapolis as well.. given the demeanor of that population.
Of course if its non owner occ much less effect but if its owner occ to owner occ those letters do have an impact
I think, for the most part, these personal letters work as "tie-breakers" not game changers. You have more experience with them in your market than I do in mine, but I can see a letter coming into play when a seller is considering two roughly equal offers from prospective home-owners, as sort of the final little push that gets one offer ahead of the other. In a battle between an investor with a weaker offer, and an end user with a stronger offer, I can't see that a letter would somehow change the game and entice the seller to forego both the stronger offer AND the fact it comes from an end user. Letters appeal to those who want someone to steward and enjoy the property the same way they did. An investor won't be that. Of course, this may not always be the case, but I have a hard time seeing a seller go for a substantially weaker offer based on a personal appeal or personal letter -- especially if that seller is a distressed buyer in need of a quick resolution to a pressing problem.
We're all going in circles here, though. I think the basic problem Vivian has is fundamentally too much competition, which means she needs to adjust either her criteria or her search method. The rest -- letters, FHA vs Conventional, terms/contingencies -- I think will be comparatively less important at this point.
- 8yJay HinrichsBusiness MemberReal Estate Consultant 路 Summerlin, NV 路 Member since 2014 路 45k+ posts 路 66k+ votes
Originally posted by @Daniel Akerman:
Originally posted by @Jay Hinrichs:
Originally posted by @Daniel Akerman:
@Terry Lao you seem to be the one not paying attention to the OP or the things being posted here. @Vivian O. clearly stated in her 3rd post on this thread, she IS PRE-APPROVED for a loan. I'm not sure why you keep harping on the pre-approval, since she mentioned at least once, if not more, that she is already pre-approved. And you keep mentioning FHA when the nature of her loan has almost zero impact in the particular situation she's having a challenge with. Additionally, she's working with a Realtor, and any Realtor worth their salt is going to make sure their client is qualified to buy -- so clearly she is qualified.
Vivian, I suspect that whether you go FHA or Traditional won't make much or any difference with your particular issue. Your issue seems to be where you're looking for your deals, and how much competition you have. So, as others have mentioned, you need to look at how you can avoid that competition.
If you are buying this property purely as an investor for cash flow, then I doubt any personal letters will make an impact. I'm not a big believer in the whole personal letter thing, anyway. You don't write a personal letter when you haggle over a used car do you? You don't write a personal letter when you buy something at an auction either -- which is pretty similar to buying a home in a competitive market like yours. If I'm a seller's agent, I kind of laugh at the personal letters and counsel my client to ignore the letters and focus on the STRONGEST BUYER. A distressed seller, in particular, won't give a damn about how sweet you are or how much you love the house -- they're in trouble and need as much money as possible as quickly as possible and that's all they care about.
I think the key issue is how/where you're finding these properties. The MLS is going to have the widest possible exposure and the most buyers to compete against you. If everyone desperate to buy a home sees the same deal, it's only natural that you're going to be in a situation with 30 bids -- and you'll lose every time because an end user will almost ALWAYS beat out an investor.
You need to be finding off-market properties and FSBOs that not many people will be looking at.
You might consider changing agents and working with a LISTING AGENT who focuses on listing short sales, pre-foreclosures, REO and foreclosure properties. An agent who does that already will have the mechanisms in place for finding off market properties, so you don't have to spend the time and money to do it. Now, you'd be working direct, which opens you up to some risk because you'd be working with the listing agent, or possibly in a dual-agency situation. But if you're aware of that and comfortable with it, you may have more luck finding a property you can afford without having to battle against 30-40 other buyers.
depends on the Market the personal letters really work in the portland market.. the sellers are not so hard nosed and tend to be very caring if they are older owners that have lived in portlandia for any number of years.. just watch the TV show Portlandia its reality I know its a comedy but it is the way it is in that market.
I can see in NY it being different as there is a thought process that new yorkers are more matter of fact..
I could see this working in Minneapolis as well.. given the demeanor of that population.
Of course if its non owner occ much less effect but if its owner occ to owner occ those letters do have an impact
I think, for the most part, these personal letters work as "tie-breakers" not game changers. You have more experience with them in your market than I do in mine, but I can see a letter coming into play when a seller is considering two roughly equal offers from prospective home-owners, as sort of the final little push that gets one offer ahead of the other. In a battle between an investor with a weaker offer, and an end user with a stronger offer, I can't see that a letter would somehow change the game and entice the seller to forego both the stronger offer AND the fact it comes from an end user. Letters appeal to those who want someone to steward and enjoy the property the same way they did. An investor won't be that. Of course, this may not always be the case, but I have a hard time seeing a seller go for a substantially weaker offer based on a personal appeal or personal letter -- especially if that seller is a distressed buyer in need of a quick resolution to a pressing problem.
We're all going in circles here, though. I think the basic problem Vivian has is fundamentally too much competition, which means she needs to adjust either her criteria or her search method. The rest -- letters, FHA vs Conventional, terms/contingencies -- I think will be comparatively less important at this point.
agreed on investment property 99% of the time is about the dough and nothing more
- 8yJames CarlsonPro MemberReal Estate Agent 路 Colorado | stan.store/JamesCarlson 路 Member since 2014 路 2k+ posts 路 2k+ votes
Originally posted by @Michael Randle:
.... In Aurora CO in 2015 when I purchased my first home I had to submit 16 offers before one was accepted.
Yeah, 6 offers is not the worst I've seen for some of my clients in Denver and Colorado Springs. That said, if you're serious about getting a place and you're not looking above your means, you should be able to get something soon. Consider looking at homes a bit lower than your max to give you space to overbid. Appraisal gap coverage and waiving all but health and safety issues on the inspection are other options if you're getting desperate. And be sure that you have a good local lender who will call the listing agent and talk them through your qualification. Strong communication from everyone on your team can help.
Good luck!
- Real Estate Agent 路 Burnsville, MN 路 Member since 2016 路 7 posts 路 2 votes8y@Vivian O. we're in the same market. Here are some of the ways you can strengthen your offer & protect yourself from being in a bad situation: 1) if possible - get an inspection before the offer deadline & determine if making an offer non-contingent upon inspection makes sense 2) use an escalation clause 3) write a "love letter" or hop on camera to tell the sellers how much you & your boyfriend love the home 4) work with a lender that will underwrite you before having an executed contract. 5) have your lender call the listing agent to confirm that you're financially rock solid 6) close at the seller's convenience 7) have your agent build rapport with the listing agent
- Minneapolis, MN 路 Member since 2017 路 45 posts 路 27 votes8y
Originally posted by @Account Closed:
@Vivian O. we're in the same market. Here are some of the ways you can strengthen your offer & protect yourself from being in a bad situation:1) if possible - get an inspection before the offer deadline & determine if making an offer non-contingent upon inspection makes sense 2) use an escalation clause 3) write a "love letter" or hop on camera to tell the sellers how much you & your boyfriend love the home 4) work with a lender that will underwrite you before having an executed contract. 5) have your lender call the listing agent to confirm that you're financially rock solid 6) close at the seller's convenience 7) have your agent build rapport with the listing agent
I got a property now, look at my latest post!馃槉
- Realtor 路 Minneapolis (Blaine), MN 路 Member since 2018 路 45 posts 路 34 votes8yKeep at it! It sounds like you have an experienced agent, so trust them and move fast! Don鈥檛 listen to Terry, he鈥檚 clearly in a very different market. Most of the properties in our area you you will likely be interested in are 70+ years old. FHA appraisals on those properties always find more work for the seller. Mainly, they have a mandate on any peeling paint on anything built before 78 to help eliminate lead paint. In a hot market FHA offers are the first ones thrown out. 5-20% conventional is the norm with cash obvi being king. FHA These days is significantly more expensive in most cases than conv so you would only do it (FHA)if you were unable to do conv.(bad ratios, getting a big gift, or bad credit) I鈥檓 a big fan of FHA in general and it鈥檚 helped millions buy homes but in this market it just doesn鈥檛 play. It鈥檚 standard for people to send a pre-approval with offers so I鈥檓 sure you鈥檙e doing that already but you might look at a stronger lender. Who are you using for a lender?? I鈥檇 look at Bell Mortgage, AMEC, Marketplace or the like. You need someone that can update a preappproval at 8 on a Friday to get a deal done, banker hours can cost you big $$. Some lenders are offering closing guarantees with large payouts for pre underwritten buyers. Escalation clauses done well can help as well. PM if you need more info on that. Good luck!!
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