Ever heard somebody say “Cash vs loan? Money is money, the seller doesn’t care, as long as we show up to close.”
Sorry, but that was so 2000-2007.
With Banks, REOS and Short Sales, money is playing second or third fiddle to TERMS, TERMS, TERMS. Banks are taking 2-4% LOWER offers (when there are multiple offers) that are stacked with great terms including:
- ALL CASH
- No Home Inspections
- No Finance contingency
- No Appraisal contingency
- No VA or FHA loans*
- FAST closings
* Many will debate this and say that these loans have evolved and are as good as regular loans. Guess what? Banks don’t care!
For example, I was talking to an agent the other day. Her client offered $100,000 over list with 50% down on a Virginia Bank Owned property. Another offer was for full list, ie $100,000 LOWER but with ALL CASH. The all cash won. But then the buyer persnickety (great word) started meddling with the bank addendum (see older post) . The bank said forget you. Went back to the 50% cash offer, which lowered the offer to $50,000 under full list.
Banks want LOW HASSLE DEALS!
For Virginia Short Sales, the seller doesn’t care about the price (slight exaggeration). They aren’t eating the loss. They want somebody that will standby and be patient. I even had one listing agent say “I don’t care about the price, the bank will determine that with a counter, I care about staying power.”
I am in no way saying that you should only buy with all cash (if you can great) and remove all contingencies. I’m just saying that it is very important to meticulously review all the terms in your contract and to make them as strong as you feel comfortable with. Maybe do a home inspection, but make it a “take it or leave it” inspection (not a “information purposes only,” I hate those. They are sheep in wolves clothing.) instead of the default which essentially says “we will inspect it and then demand petty changes.”
And believe it or not, I can’t talk about all the things we do, but there are many other ways to win a contract for LESS than the highest offer. But yes, it takes some thinking (wow, an agent that thinks, imagine that?).
And generally I don’t like escalation contracts.
Why? If you have great terms, you will be outbidding a sucky terms contract. How dumb would you feel if you escalated $10,000 higher because there was a high offer with a home sale contingency? Or if you waive the appraisal and the offer you beat doesn’t. Why beat another offer the seller wouldn’t have taken? You can adjust the addendum to try to protect from this. Make sure you are beating not only the price, but the terms.
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