Question Details

Brian J. Lee, Home Buyer in Los Angeles, CA

If cash offers always trump financed offers, why is the listing agent asking me for more info and a "best & highest"?

Asked by Brian J. Lee, Los Angeles, CA Wed Dec 14, 2011

I recently submitted a financed offer for a property and was asked to resubmit my "best & highest" offer. My question is if banks always take cash offers over financed offers, why would the listing agent/bank even entertain my offer? Why specifically ask me to submit extra documents? I was told that I'm involved in a multiple offer situation and that there are most likely cash offers in the mix.

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A couple of years ago, I had an offer on a property with the asking price of $59,900. My conventional buyer offered his highest/best offer of $59,000 (knowing there was at least one other offer). The bank went with the other offer. I was curious and followed-up on the property once it closed. The cash offer (that closed 45 days later) was accepted for $40,000. I couldn't understand why the bank accepted $19,000 less for a cash offer that took as long as my conventional offer.

There are several items that can come into the mix. The tier is cash, conventional then fha as far as best terms. If you opt to not do an inspection (risky but would remove the contingency), if you offer a higher EMD (that money will come off of what you'll owe) it could show you're a more serious buyer than someone who would put down a minimal amount.

You never know what the other offer is. The banks do what they want to do (even if it sometimes doesn't make sense to us).
0 votes Thank Flag Link Wed Dec 14, 2011

It's likely that the seller views your offer as one that with enhancement could find you in the "winner's circle."

It is a fact that banks like cash offers and often lean toward them. But a cash offer in not necessarily iron clad. "Highest ans Best" can take on many different considerations: minimal contingencies, flexible closing, no seller concessions, cash deal, etc. to name a few.

Also there are no guarantees with offers. People have second thoughts, plans change, new opportunities arise, etc. An offer that has little appeal initially may be a long shot but shouldn't be ruled out because things change.

Good luck,

1 vote Thank Flag Link Wed Dec 14, 2011
One incredible advantage cash offers have over all others is the avoid the very trap the banks have created.
Cash offers will not have a appraisal contingency!
The bank know what this means and they would do well to avoid further negotiations.

Purchase offer price is only one element of the buyers proposition. Unfortunately, there is no transparency in these situations and create a fertile ground for conspiracy theories. The truth is you will succeed in purchasing a house if you listen to the council or your pro adviser.

Put is your best offer and then start looking for another home. You never know what will happen.
Web Reference:
0 votes Thank Flag Link Thu Dec 15, 2011
As simple as possible: Why not ask you that. You may just submit a higher offer. It's the bank's way of creating some sense of urgency and anxiety in the deal. Make a little bidding war. It tends to drive the prices up. Although I do see cash offers take the lead more often than not, there are some financing offers that make it into first place.

I think it's in the real estate agents hands to help make a good presentation about their buyer in order to be among the top contenders in the offer race. I use a couple creative techniques to stand out. Success 90% of the time.

Best of Luck.
0 votes Thank Flag Link Thu Dec 15, 2011
ahh, the phrase that strikes fear into the hearts of buyers everywhere: "You're in multiple offers, bring us your highest and best!".

While Cash is King for a number of reasons, the bank is asking all of the offers to go back, and rethink and possibly modify their offers. The bank might be hoping that one or more of you will change your offers to cash offers. (a "cash" offer doesn't actually have to be cash... it merely is an offer NOT contingent on obtaining a mortgage).

Don't fret... they're giving you an opportunity, just in case one of the offers is already "higher and better" than yours.
0 votes Thank Flag Link Wed Dec 14, 2011
Alan May, Real Estate Pro in 60201
I agree with Ron. Who ever told you banks accept cash offers over financed ones, is simply not true! The bank wants the best NET to them. If you have two offers that are the exact same (same price, same terms & conditions), except one is cash and the other is an FHA loan, then yes the cash offer will likely win. Sounds like you need better advice. If you're not working with a Realtor, then you absolutely need to be. And if you are working with one, then I'd rethink using that person.
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0 votes Thank Flag Link Wed Dec 14, 2011
To a Bank, a Financed Offer is a CASH offer; they get their money either way.
The reason a CASH offer is better, is that it is STRONGER; the Seller and the Bank do not have to worry about the financing falling through.
And whoever told you that the Banks ALWAYS take CASH offers over Loans, didn't know what they were talking about.
It really sounds like you are trying to do this without a Buyer's Agent advising you; because your questions should never have gotten this far.

Good luck and may God bless
0 votes Thank Flag Link Wed Dec 14, 2011
They don''t always take cash offers ovre financed offers. They look at the best bottom line, what they net.. Highest and best means there is usually a "multiple offer" situation. Always best to review comps(SOLD) with your agent. Make sure you are working with your own buyers' agent. The listing has no alligence to you.... for advice.

Phyllis Crosby, Realtor/GRI
ReMax Realtec Group
Tampabay Florida

0 votes Thank Flag Link Wed Dec 14, 2011
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