Posted by Dawn Barrier on January 24, 2010 at 7:30am
What? But I thought Cash was King? That is what you are most likely saying to yourself right now?But, in this market it may not always be. You can't assume that Cash will always get the house, at least that is what I'm seeing.There are a lot of cash buyers bidding on homes in Las Vegas right now, and it seems (or you would think) that most of the time a cash buyer will get the home over a buyer who is financing, but, that is not always the case.I am currently working with a few cash buyers and one of them actually did not win a bid on a home they wanted, even when the bids were at asking price (which by the way was at the TOP of the price range for this area and home, it would be the new high comp), buyer was paying all closing cost and offering a 15 day close with inspections being the only contingency.Now, maybe this bank did actually get a higher offer from the fha/conventional buyer (even Cash buyers have a limit as to how much they are willing to pay), but the bank maybe running the risk that this home may not appraise at that higher offer and then they will be 2-3 weeks into the deal and have to lower their price anyway or ask the buyer to pay the difference.Or maybe, just maybe in that area we maybe seeing a turn around in prices for the better. Maybe they didn't believe me when I said, "No, they are not an investor, they want to retire in this home". That is a possibility as some lenders will actually favor a first time home buyer over what they think will be an investor. Maybe the other buyers agent worked for the same company. There are many variables and you just never know what a bank will do in this market and the sellers agent most likely will not let you know why your offer wasn't chosen, but your offer will most likely be in backup position with the other offers that came in.So, buyers in the Las Vegas area, get ready to make several offers on several homes before you actually get one.By the way, my buyers moved on and we have another home in escrow now
Michelle,
Yes, that is similar to what is happening here too. The REO agent should know the comps in the area and know that the home most likely won't appraise that high, but I guess they are willing to take that chance to get the bank the higher price if possible and then they just use the cash buyer as the fallback backup buyer. Risk they can take, but my cash buyers don't wait around, they move on.
Hi Dawn, I'm noticing in my area which is the San Francisco east bay that some of my cash buyers are loosing out to some higher offers which are financed. But in the low end areas, the homes don't appraise for what the offer was and then the house falls out of escrow only for either my buyer to pick up or another cash buyer. Not sure why banks don't think about, what if the home doesn't appraise for what the offer is if financed. They know these some of these buyers who are financing are paying 20K over asking and that is very risky in low end areas where many homes are seller for list or just slightly over asking.
Comments
Yes, that is similar to what is happening here too. The REO agent should know the comps in the area and know that the home most likely won't appraise that high, but I guess they are willing to take that chance to get the bank the higher price if possible and then they just use the cash buyer as the fallback backup buyer. Risk they can take, but my cash buyers don't wait around, they move on.