Home Buying in Granada Hills>Question Details

Nybaby0126, Home Buyer in Granada Hills, CA

What wins : Cash or strong offer?

Asked by Nybaby0126, Granada Hills, CA Wed Aug 25, 2010

A condo went on the market and 2 days later supposedly already has a cash offer with the amount undisclosed. I just put an offer over the asking price and a 20% down payment. My FICO is also 640 and I'm a first-time home buyer. This is also a foreclosed bank property. What deal looks better to the bank?

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13
Houman Shahi’s answer
It really depends on the seller's financial situation. If you only made an offer 5%-10% above the cash offer, chances are that the owner would prefer the cash offer. Again it really depends on the seller's situation but in this market "Cash is King". Also, remember that cash buyers feel the power and may easily cancel the deal and move to another home. Best luck to you.
0 votes Thank Flag Link Thu Aug 26, 2010
Usually if the cash offer is within 10 percent of asking they will win, especially on a foreclosure. Don't get discouraged though, I see conventional loans on the top of the list as well. There is plenty out there to buy!

Good Luck

Chris Blasic
0 votes Thank Flag Link Thu Aug 26, 2010
Cash is king bro. The cash offer is probably much lower than yours, I would imagine at least 3% less, but the bank took it cause like others say, theres nothing to worry bout financing because there is none.

Just keep looking and bidding, the market is slowing down again, so you will pick up a home soon.

Good Luck
0 votes Thank Flag Link Thu Aug 26, 2010
Right now banks have lots of inventory to dump. Cash will likely win because it's a sure thing. Good luck!
0 votes Thank Flag Link Thu Aug 26, 2010
Great question! You said you wrote an offer over list price...but didn't give me all the data. Your ficos aren't the best (they like to see better), did you include 3% for closing costs paid by seller? (They want to see the bottom line they will net, and this would be substracted from your purchase amount). If the ALL cash buyer didn't ask for any...they would win.... How much OVER list price did you go...10% higher? You can watch the mls to see what they sold it for..it gets disclosed after escrow closes. Good luck!
0 votes Thank Flag Link Thu Aug 26, 2010
A cash offer is a good thing however if you are bidding on a Foreclosure
and your cash offer is lower then list price chances are you will not get
the property. Right now you might but once more Foreclosures are on
the Market it will become a bidding war.
A good strong Offer right now could win a property as oppose to a
low cash offer. I have seen many Foreclosures sell with Buyers
who have loan approval and who have a good down payment.
The Banks want the highest offer so that the Asset Managers are satisfied.
Web Reference: http://www.lizchaffe.com
0 votes Thank Flag Link Thu Aug 26, 2010
Cash offer wins if it's the same price.

Sorry about your experience.

Banks look at price then loan. It's a combination of the two and terms that make a super duper STRONG offer.

On to the next one or make sure you write a back-up offer. The do go through. The drop out rate of escrows is about 30% so I strongly recommend being in back up offer position.

Best,

Monique Carrabba
The Carrabba Group
Keller Williams Hollywood Hills
mcarrabba@kw.com
(323) 899-2900
0 votes Thank Flag Link Wed Aug 25, 2010
Nybaby,

Unfortunately the trend in our area seems to be going in favor of the cash deal with foreclosures. It seems that banks are trying to wash their hands of these properties completely.

This is no reason to not try for the property....anything can happen but you have to be "in the game to win it!"

Good luck,

Bill
0 votes Thank Flag Link Wed Aug 25, 2010
For the buyer, cash is always faster and easier. That said, what wins however is not black and white- cash less than 85% of list price with or without alot of contingencies will not fair as well as lender based offers that are closer to list price with few contingencies etc. With short sales and bank owned the lenders offfering the home through real estate agencies do not care which form the offer is in because both have to show ability to pay. The question then is how close to the list price is being offered and how many special items are included in that offer.
I have a cash offer, on a bank owned property that is the only offer but is 80% of list price and it has been sitting with the lender who owns the property for two weeks due to (probably ) the fact that it is not at least 85% of list price. Rather than reject the offer they are chosing to stall in the hopes that a stronger offer comes in.

It is like playing chess in a way. you have to know what you are willing to invest, how badly you want the property and what you are willing to do to get it... best of luck
0 votes Thank Flag Link Wed Aug 25, 2010
I totally agree cash is best; however, a strong offer goes with it. The bank also wants the deal that brings the best net to them. Agents aren't allowed to disclose the amount offered. If the Buyer backs out during due dilligence (inspection) period, and everyone knew what the seller was willing to accept, it could hurt their chances of getting a higher offer from the next person.

The Bank may have gotten that first offer and accepted right away, feeling it's better to go for it rather than hold out for more money and not get anyone else willing and able to qualify. They may have had a lot of foreclosures on their books and didn't want to be tying up their money on any more homes. We'll never know.

Wanda Couch .. negahomesforsale.com
0 votes Thank Flag Link Wed Aug 25, 2010
Although cash tends to be preferred by banks since it involves more confidence on their part, you never know until you submit the offer. It,s not uncommon for buyers to have to submit several before one is accepted, good luck in your home finding endeavours.
0 votes Thank Flag Link Wed Aug 25, 2010
'Cash is king,' they say. But it really depends on the property and on the seller. Some banks want to make sure to sell for as much as possible, even if it means risking a longer escrow with contingencies.

It's especially tricky with condos right now: so many HOA's have no reserves or have default ratios too high for buyers with financing to qualify, so banks will often go for the sure thing with a cash offer.

Clark Hill
Broker/ Manager REO Dept.
Century 21 All Moves - Granada Hills
http://www.ClarkSellsHomes.com
0 votes Thank Flag Link Wed Aug 25, 2010
Hi Nybaby0126,

The Cash offer will typically be preferred by the bank (no loan/ appraisal contingency to worry about).

Best, Steve
0 votes Thank Flag Link Wed Aug 25, 2010
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