Home Buying in Miami>Question Details

Melisrodrigu…, Home Buyer in

Cash or 203k, who wins? Offer made on foreclosure property.

Asked by Melisrodriguez07, Tue Sep 11, 2012

days. After checking the MLS yesterday he had changed the description and extended the deadline to yesterday at 10am. How long does it take for the banks to come back with an answer? Im afraid that like the past 7 offers I have made on homes that this one will be swiped by another cash offer. I have a 203k loan who I am pre approved by BOA for as well. I'm assuming that is beneficial as well? And from what my realtor says a very strong offer. I ended up offering 38k over asking price.. Which I feel cash buyers won't do. Then again homes in my area of South Florida do not last but a few days on the market. Thoughts?

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Milton Knight, Hablo Español’s answer
Keep all options open and on the table.

When searching to purchase your home as well as searching for a mortgage loan you should keep your ALL your options on the table. Allow me to relate:

First lets talk about financing. Don't just limit yourself to FHA 203K. There are other loan programs that you may qualify for; for example the much more popular FHA 203b, or conventional, or Home Path loan programs, just to name a few.

HomePath Mortgage allows a buyer to purchase a Fannie Mae-owned property with a low down payment (minimum3% down), no lender-requested appraisal, and no mortgage insurance. It should be noted that Bank of America does not offer the Home Path loan program. Another added benefit is that Fannie Mae participates in the National Stabilization Program First Look Initiate whereby during the first 15 days the eligible buyers are owner occupants, public entities and their partners, and some non profits (not investors). More information is available at http://www.HomePath.com

Second lets talk about real estate. Once you know ALL the loan programs you qualify for, know your limitations, and know the the criteria of the home you want...THEN your Realtor can send you a list of EVERYTHING available within that criteria leaving absolutely no stone unturned. And when you see a property you like...GO FOR IT...and put your best foot forward when making your offer. Don't be discouraged if some offers don't get accepted. I have seen some customers disappointed when certain offers were not accepted... only to be much, much happier later when an even better home came around and they finally got the offer accepted on that property.

Be Patient. Stay Positive. And Keep All Options on the Table.

Milton Knight
Lic. Real Estate Broker | REALTOR
Lic. Loan Originator | NMLS 291097
SunLife Realtors
4000 Ponce De Leon # 470
Coral Gables, FL 33146
T: 305-476-1666
F: 305-777-0329
E: FloridaHomeKey@bellsouth.net
S: Facebook
W: http://www.SunLifeRealtors.com
0 votes Thank Flag Link Sun Sep 16, 2012
From what I hear from the asset managers - it usually takes "10 to 15K higher than cash offer" for the financed offer to get accepted. It helps if you plan on residing in the house. Asset managers do want "real" people in the house, not just investors.

However, 203K are complex and are not popular with the asset managers at all - because they
rarely come true.

They'd rather have a firm cash offer than a complex, highly unlikely to close at all or timely, 203K.

Since we don't know your overall financial picture, it is hard to advise specifically, but a game
changer might be a tall order.

Hope this helps,

Irina Karan
Beachfront Realty, Inc.
IrinaKaran@gmail.com
0 votes Thank Flag Link Sat Sep 15, 2012
Hi Melis,

I am afraid you are in a jam. Your market experience is more common than anyone thinks. I have been working with an FHA approved Buyer for about six month and we have experienced the same; offer after offer and someone else has always beat them to it. Having had experience in the distressed sale market, for several years now, I have to say it is getting harder for conventional Buyers to beat the individual who is buying cash even when their offer is above the asking price. Anyone who tells you otherwise is yanking your chain. Cash is (almost) always king!

Most Buyers waited too long to get off the fence and now they are competing with each other for the same property. To make matters worse, the investors and speculators are in the mix as well. They know the market has turned and that it is only a matter of time before they can turn their purchase and make a profit.

For those of you who waited this long, I have some advice; GO FOR THE UGLY HOUSE!!!!! There will be less interest for these homes. Yes, you will have to work hard, but this may be your only opportunity to buy in this market. Pick a home priced below what you are pre-qualified for and make your highest and best offer - may have to be for more than the asking price.

In this case the 203K will come in handy - you will be surprised what a coat paint, landscape, new bath and kitchen will do to an ugly house.

One other thing. What I am about to suggest may have some risks associated with it and I strongly advice you to ask your attorney to thoroughly explain the consequences of making this kind of offer.

What I suggest to my Buyers do (in Florida) is to make the best and highest offer along with a conditional commitment letter. What this means is that you, the Buyer has waived the finance contingency and instead of waiting out the full default commitment period as stated in the FL contract, you are fully commited to buy the property (in essence this would almost be a cash offer) coming in. Once the offer is accepted, the Buyer is fully committed (from day 1) to buy the property and the Buyer's deposit will be in jeopardy unless the property doesn't appraise or there are issues (as per your contract) with the inspections.

Important Note: Every case is unique and you must consult with you RE agent and an attorney who can thoroughly explain the consequences of waiving the Finance Contingency before you present an offer.

For more information, you can contact me at 786.302.0351 or email me at juan@insideMIAMIrealestate.com. You can also visit me at http://www.insideMIAMIrealestate.com

Juan Sanchez Broker Associate Real Living FSR Coral Gables
0 votes Thank Flag Link Sat Sep 15, 2012
BOA is not known to close on time, and the only time you need a 203K is for a fixxer, so if the home is not a fixxer upper than just indicate you are doing FHA to offer that much over list price is crazy and if you can pay the extra $38,000 out of pocket as you have said why would you be doing a 203K unless the house is in really bad shape? Take the $38K and show it as a down payment, the banks do not want to hear that someone will pay the difference between appraised value, they will not usually lend that way. The only difference between the cash offer is that there is no contingency for financing, but usually the other contingencies remain like the inspections. I have had cash buyers come in with good offeres on some foreclosures and the banks have taken a financed offer over my clients cash offer, so it really does work both ways, the seller gets cash in the end no matter.

Fannie Mae bank owned properties are open to owner occupant offers for the first 15 days but even after the 15th day they will take an owner occupant offer over an investor offer most of the time.

Best wishes on you potential home purchase!
0 votes Thank Flag Link Wed Sep 12, 2012
well, I would have your realtor put an addendum if it is not too late, saying that you will pay either the appraised value or a certain amount (put a specific percentage or dollar amount) higher.

Beth Jenkins
South Florida Brokers
786-374-4778
0 votes Thank Flag Link Tue Sep 11, 2012
Now I hope I didn' offer too high. Although I did disclose I would pay the difference of the appraised value. Chances?
0 votes Thank Flag Link Tue Sep 11, 2012
Hi,
All good answers below. The best being that the bank knows that the property will probably not appraise if you offer too high.
My advice would be to look a regular sales rather than bank onwed properties. There are just as many deals, and are often in better condition.

Best of luck,
Beth Jenkins
South Florida Brokers
786-374-4778
Web Reference: http://www.arealtyteam.com
0 votes Thank Flag Link Tue Sep 11, 2012
You may want to focus on REOs that are only available to "owner occupants". Investors will bid based on the market value and will ignore a listing price. Also a 203k will take 45 days to close.

Expect to pay "above" market value in this market.
0 votes Thank Flag Link Tue Sep 11, 2012
Cash offers have no restrictions. They are easier to close than a loan deal as well. When accepting offers, banks look at all avenues of the offer and they are going to take the one that benefits them the most. Most of the time, it is going to be a cash offer as long as it is within the playing field of the other offers, because it's a done deal. There are many reasons that loans fall through and the banks just do not want to deal with it if they do not have to. Same goes for anyone selling their home.
0 votes Thank Flag Link Tue Sep 11, 2012
I have not made low offers. As a matter of fact I learned that after my first offer being outbid by an all cash buyer.. All my offers lately have been above and the last 4 homes I lost to cash were simply because they were all cash not because they were necessarily higher.
I need a bank to see that I'm not an investor and I'm going to be coccupying a home. The system makes financial sense but it is not giving the hard working young professionals that do not have 350K in cash sitting under a mattress the chance to make a dream a reality. The bank has already had a BPO and I fall within the appraisal area. I have already disclosed that I would pay cash for the difference on my offer and appraisal value. Thoughts?
Flag Tue Sep 11, 2012
Even if I;m using them as my lender and they are also my banker? They can clearly see my assets and my proof of funds. My lender also communicated that with the listing agent. Stating how solid of a candidate I was and how there would be no roadblocks.
Flag Tue Sep 11, 2012
If you've made seven offers that have not been accepted, then you're playing in the wrong game against professional investors, or you're making unrealistically low offers. Don't keep doing the same failed action over and over again. Re-evaluate your goals and talk with your agent about focusing on private sellers who have properties that need TLC.
0 votes Thank Flag Link Tue Sep 11, 2012
The problem is a 203k loan is one of the hardest and riskiest mortgages a bnuyer can get in the eyes of a seller and their agent. They will often take cash offers that are lower in price with NO contingincies over a higher priced offer that could fall through because of teh 203k part of your mortgage,
0 votes Thank Flag Link Tue Sep 11, 2012
Visit my website for available listings across Miami. Foreclosures are great but you are competing against investors and institutions and brokers and thier friends to find a great deal.

Stop wasting your time chasing foreclosures. There are plenty of good deals to be found in the general marketplace.

As an investor broker for 10+ years, you need to learn and change from your experiences. if every deal is falling into the hands of a cash buyer, what makes you think the next deal will be different?

you need to re-focus on general market sales and find a good property that you can remodel to make your own.
0 votes Thank Flag Link Tue Sep 11, 2012
Some banks and asset managers do not accept financed offers that high above asking because they know the appraisal will not hold in the end and they will end up renegotiating most times for less than a cash offer would have been.
0 votes Thank Flag Link Tue Sep 11, 2012
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