Thread: Real Estate and cash offers

If you have a pretty good down payment then get another type of loan. Your chances will improve if you are not using FHA.

I don't have enough for a conventional loan.

Originally Posted by vic987

Damn, every house I put an offer on gets beat by cash offers. I'm going with the FHA loan with a pretty good down payment amount. My agent (who's my cousin) doesn't really seem to care that I'm getting beat everywhere by cash. Is there anything we can do?! When I ask him he just systematically says "we can't do anything". I'm starting to think I'm not gonna get anything. In my city homes are as low as 50k for 2bed/2bth with 1000+ sq ft. All these investors are ruining my chances of getting my first home.

I suppose you just have to keep trying... Ca$h is king, and nothing beats it... You just have to wait until one of your deals goes through.

Later!

If you know there are other offers and you can go higher, do so, and as long as your agent thinks it will appraise. You may then be able to beat out some of these cash offers.

Originally Posted by craig

If you know there are other offers and you can go higher...

What kind of advice is that?? Unless you are severely low-balling, you offered what you thought was a fair and reasonable price. (If you are low-balling, then you better have something that is "interesting" to the seller, like NO CONTINGENCIES and CA$H.)

Originally Posted by craig

... do so, and as long as your agent thinks it will appraise.

Yeah, do what your AGENT thinks, not what makes sense to you... Wow, words I will need to put in my book of wisdom.

(Sorry for the scarasm, but please elaborate, as I know you probably "tought" what I was thinking, but failed to put them down... This type of "exclusion" could get some newbies in a real bad situation, and that is not good.)

Later!

From experience, a higher offer doesn't mean a whole lot. In our market, I've seen FHA buyers come in as much as 10 - 15K higher than the next offer (which is cash) and the seller's go for the cash offer for several reasons -

(1) My client (the bank) knows the funds are there.

(2) There is no financing contingency or extra condition qualifications.

(3) The appraisal could be a definite problem

(4) If the city requires escrows for repairs FHA buyer's (unless on a renovation loan and even then it can be sticky) typically don't have the extra cash around to meet it.

As an FHA buyer, you're going to be in second position to a cash buyer unless the cash buyer's offer is ridiculously low or obscene. Just keep trying, you'll eventually find it.

FHA, competing with cash buyers, is almost always going to lose out - even if the offer is higher.

You might be better off looking for short sales than REOs. I'm not a big fan of short sales... because it takes the lender so long to respond, and only if the owner's financials have been submitted & accepted.

But you might see if your Realtor can find you a few short sales in your price range and see if you have any better luck.

Good luck!

Excuse my extreme ignorance here... Cash is better no doubt, but the seller gets paid the full price of the house anyway, whether the buyer borrows or not, so why do the sellers care so much? Just the extra time involved?

All kinds of potential problems with financing - buyer's credit score drops a few points - loan denied. Home doesn't appraise - loan denied. Buyer loses his job or has some other change in income - loan denied. Lender changes his qualification requirements (which we saw a lot last year) - loan denied.

Many ways for the deal to go south when there's financing involved. Far fewer with cash.