Perfect Buyer Lost Out to Lower-Priced Cash Offer – Needlessly
The percentage of cash offers is way up this year, as most agents know, for a variety of reasons including: (1) some cash-rich buyers consider financing too expensive and/or not worth the trouble; (2) many cash-rich buyers can’t qualify for competitive financing; (3) corporate and LLC buyers can’t qualify for competitive financing; and (4) THE BIGGIE: CASH OFFERS GET ACCEPTED OVER HIGHER-PRICED FINANCED OFFERS more often than not, as sellers mistakenly believe that lower priced cash offers are better than higher-priced financed offers in all cases.
One of our clients recently lost to a lower-priced cash offer, and it was heartbreaking, to put it mildly, as it was a lose/lose/lose/lose situation.
This is why it was so sad and frustrating:
- The cash offer was for $10,000 less than our offer – a lot for a lower-end property;
- The property was eligible for an appraisal waiver (PIW), we found out after the fact;
- Our client was as pure as the wind-driven snow and could have waived all contingencies;
- With the appraisal waiver, we could have closed in TEN CALENDAR DAYS;
- We didn’t even know offers were being made, let alone offers against cash; and
- Everyone lost – our buyer, the seller, our agent partner, and of course JVM.
What to Do When You’re up Against Cash
If you are up against cash offers, we advise the following:
- Give us the address so we can run “DU” (Fannie’s automated underwriting software) to see if we get an appraisal waiver – which will allow us to close in 10 calendar days;
- Have us call the listing agent to tout the strength of our pre-approval and guarantee a fast closing; and
- Write the offer with a 10 to 14-day close (10 days if we get an appraisal waiver).
Fed Is Not Going to Raise Rates Again…
The Fed is referring to its decision not to raise interest rates in June as “a pause,” stating that more rate increases are not only on the table but likely.
The odds of a July rate hike are over 60%, according to some analysts.
BUT – the Fed rarely to ever hikes again after “a pause,” and almost always starts to reduce rates after a pause.
George Gammon explains why in this excellent 1-minute video.
So, despite all the “good news” I blogged about yesterday, I’d bet dollars to donuts that the Fed’s next move will be down.
Jay Voorhees
Founder | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167
