mary.k.vanho…, Home Buyer in Ponte Vedra Beach, FL

What is a better offer, cash for asking price or slightly over asking price with a 40-60% CTM?

Asked by mary.k.vanhorn, Ponte Vedra Beach, FL Wed Feb 13, 2013

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Cash is always the preferred method. That being said, every market is different and so is every buyer's budget. In San Diego, I recently had a buyer I'm working with overbid $10k on their purchase with a conventional loan (25% down) and the comps did not support the offer. The buyer planned to pay the difference out of pocket from the appraisal to get the home. A cash bidder came in and bid $20k over market price (and $10k over us). The seller (a traditional sale) didn't even want to talk to us after that. This is what happens when is limited inventory and prices are low.
0 votes Thank Flag Link Sun Mar 24, 2013
Do what you're more comfortable doing!
Offer what you think the house is worth!

The only way to tell what a "better offer" is.........is to see if the seller accepts it!
Really - who cares what we think - we're not selling you the house! The seller's situation and motivation may dictate what is more appealing to him or her.

Now, if you're talking about all cash compared to, for example, an FHA (3.5% down) loan, then it's a different story, and may play out differently, but with 40-60 % down, that's a strong offer in its own right, and most sellers would be happy with those terms (assuming there is a pre approval to go along with it).

By the way - you didn't mention whether you would be putting an "appraisal" contingency in your all cash offer!
0 votes Thank Flag Link Wed Feb 13, 2013
I would take the cash for the listing price to get through the closing smoother and in less time.
0 votes Thank Flag Link Wed Feb 13, 2013
How do we get LTV from CTM?
0 votes Thank Flag Link Wed Feb 13, 2013
Let me ask you a question. If you were selling and someone offered these two options to you, which would you take?

List Price = $200,000

1. Cash offer close in 20 days for $200,000

2. Offer of $206,000 close in 40 days, buyer putting down 40% LTV


Would you not wait 20 days more for $6,000 more? That's $300 a day to wait. Most of the time a cash buyer thinks they have the world by the tail and would offer something more like $195,000 making waiting even a better deal.

Tim
0 votes Thank Flag Link Wed Feb 13, 2013
In our market, cash is king! And with all of our multiple offer situations, it is still often necessary to go over asking price. We have less than a 5-month supply of homes in the area, so 2, 3, 5 offers on one home is the norm. You will often see "highest & best offers by...". Since appraisals can be an issue, the highest cash buyer typically wins. In the example Tim used, if it doesn't appraise at $206K, clearly it was not worth the wait. Every real estate market is different, so it is best to speak to someone in the area where you are buying.
Flag Tue Mar 12, 2013
Are you referring to LTV (Loan to Value)? Are you intending to put down 40-60% in cash and borrow the balance? If this is what you are asking I don't see the relationship between negotiating an offer price and financing unless there is a second being carried by the seller. Either way it is still contingent upon Appraisal. Please elaborate.
0 votes Thank Flag Link Wed Feb 13, 2013
Help me here; What is a CTM?
0 votes Thank Flag Link Wed Feb 13, 2013
I never saw that before, either....I am guessing it means "cash to mortgage" maybe...putting down 40-60%??
Flag Wed Feb 13, 2013
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