Home Buying in Concord>Question Details

Lisa Bias, Home Buyer in Concord, CA

Why would the listing agent accept an offer that is $10,000. more than I offered, when I am a cash buyer.

Asked by Lisa Bias, Concord, CA Mon Feb 27, 2012

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Steve Ornellas’ answer
Lisa:

The Listing Agent does not accept offers, only the Seller does.

As "K&K" commented below, the Seller may consider the extra $10K to be significant.

Perhaps the accepted offer was better packaged or you asked the Listing Agent to submit an offer and the Sellers did not want to enter into a dual-agency situation.

Your best bet to get a straight answer is to have your Realtor® actually call the Listing Agent for some feedback.

-Steve
2 votes Thank Flag Link Mon Feb 27, 2012
BEST ANSWER
Lisa, If the seller had countered you with the extra $10k, would you have met that price? That is the question that needs to be asked. If so, then you would have been a better offer, at least on face value. If not, then they took the highest offer that will net them the most. In this market where there are multiple offers, they could keep you as a back up offer if you asked and the seller is willing. This market is very challenging with most of my clients putting in more than one offer before getting into contract. Keep at it, you will be successful.
Regards,
Suzanne
1 vote Thank Flag Link Tue Feb 28, 2012
There's an old saying in this business. Cash is great....if it's enough cash. In my experience a cash buyer cab get a small discount mainly for the "hassle factor" of financing.It's also important to understand who is behind the decision. If your offer was to a private equity seller I can tell you that EVERY equity seller will go for $10 k more. I'm guessing you offered either on an REO or short sale. If REO than it was not the agent's decision it was strictly the asset manager. If it was a short sale then yes, there is a very high chance it was the agent who encouraged the seller to sign the other offer. I have been in that agent's shoes many times. In my opinion the single greatest and first considered factor in deciding who was the wining bidder when two bids were fairly close in terms is to determine what buyer is the most committed to waiting the 1-4 months to process the short sale. I have had considerably more cash buyers walk away from short sales in process than I have had financed buyers. So I'm also guessing that agent might not have felt your offer and commitment were sincere enough. Make sure your agent spends some time convincing the short sale listing agent that your offer is sincere and that you will wait 1-4 months.
2 votes Thank Flag Link Mon Feb 27, 2012
Hi Lisa,

The adage, "Cash is King" is not as true today where everyone is trying to get as much for their properties as possible. The advantages of cash is no appraisal, so the property can sell for over the current comps, (if the buyer is willing), but aside from that, if the higher offer buyer has a solid pre approval it will beat out other offers.

Hope this helps...

Regards,
Suzanne Looker
2 votes Thank Flag Link Mon Feb 27, 2012
Despite popular opinion, cash is not necessarily king. Wouldn't you want 10k more if you were selling your home. Money is money no matter what form it's in.
Web Reference: http://www.brokerdawson.com
2 votes Thank Flag Link Mon Feb 27, 2012
The listing agent doesn't accept offers, the Seller does - Typically sellers want to get as much as they can for their properties. Did the sellers counter your offer to ask if you would increase your offer?
1 vote Thank Flag Link Thu Mar 15, 2012
So, the seller (not the listing agent) accepted an offer that was $30,000 over their list price. And you're wondering why would they take that offer, which was contingent on their obtaining a loan, instead of yours which was $20,000 over list price but was cash?

It's very possible that the offer they accepted included documentation showing that the buyer was an excellently qualified buyer, who was putting 50% down, and was only asking for two weeks to produce a mortgage commitment. Hence the seller's "exposure" was limited to two weeks, and had an excellent chance of paying off, and gaining him $10,000 over your offer (not an insignificant amount of money, I'm sure you'll agree).

While obtaining a loan, these days, is far from a sure thing. The seller clearly felt it was worth the risk... as it's all cash (to the seller) at the closing table.
1 vote Thank Flag Link Tue Feb 28, 2012
Alan May, Real Estate Pro in Evanston, IL
MVP'08
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Price and terms are key factors that a Seller considers when looking at multiple offers. Cash always puts you in good position but not always the best position especially if a Seller needs to net a certain amount from the sale--in that case highest bidder will be the one the Seller selects.
1 vote Thank Flag Link Tue Feb 28, 2012
The answer is in your question. In general the higher offer will be accepted especially if the difference is more than a few thousand. The particulars of the offer and the type of seller are also very important. Often bank owned homes, or REO's, will accept a lower cash offer primarily due to the fact that cash eliminates most variables in the escrow process. Once you release contingencies the chance of the transaction closing are very high. The real trick is that there is generally no way of knowing if a lower cash offer will be accepted and the REO's do not usually counter. Short sales are often open to cash offers but have concerns if the buyer will wait for the approval. One way to convey this to a short sale seller is to deposit your earnest money into escrow upon seller’s acceptance and to make it a large deposit which will provide the short sale seller with reassurance that the buyer will wait out the process. Equity sales including investor flip are not usually as open to lower priced cash offers but will generally counter the terms and do appreciate the solid nature and ability to close quickly when using cash to purchase. Don't be discouraged keep on trying, you just have to throw it against the wall and see if it sticks.
1 vote Thank Flag Link Mon Feb 27, 2012
As pointed out below, the seller decides but most likely it's because it's $10K more than your offer.
1 vote Thank Flag Link Mon Feb 27, 2012
Why should the seller take $10,000 less?
Unless they are in a rush to close, a preapproved loan from a reputable lender is as good as cash.
1 vote Thank Flag Link Mon Feb 27, 2012
First of all unless the listing agent is the seller it would be the seller accepting or rejecting your offer not the agent.
Why wouldn't a seller want $10K more. So many buyers make the mistake that cash is king. If someone wanted to get a loan and pay me $10K for my house I would take it, wouldn't you?
Web Reference: http://www.laura4homes.com
1 vote Thank Flag Link Mon Feb 27, 2012
Why not? If the buyer can qualify for a loan, it's all cash to the seller at closing either way. Yes, a cash offer looks desirable from the aspect of one less contingency. Although, cash doesn't necessarily mean the seller should or will accept less for the property.

If two offers were equal with one being financed and the other being cash, I would absolutely lean towards the cash offer. $10,000 is a lot of money to a seller though. So, if they are fairly confident in the buyers borrowing capability, I would absolutely go for more money.
1 vote Thank Flag Link Mon Feb 27, 2012
Quite simply, some sellers belive that $10,000 is a lot of money and would like to have it, even if it means the contingency of a loan.

I've found that cash buyers tend to bid lower than those with mortgages. While some sellers might favor tthe cash buyer, some would rather go for the higher price.
0 votes Thank Flag Link Sun May 6, 2012
The listing agend did not accept the offer the seller / owner of the property did.
Now please let me ask you a couple of questions.

Assume you are selling a house you own free and clear and I am trying to buy it.

I offer you $100,000 all cash close within 30 days.

Buyer #2 offers you $110,000 closing within 30 days. Buyer two is getting a loan from a bank and provides you a letter from the bank saying that their credit has been checked and they are approved for the loan. All they need to do is find a house.

Would you like to deposit $100,000 from me into your bank account or $110,000 from buyer # 2 into your account?

Do you care if the money you get comes directly out of my account or directly to you from a bank that loaned it to the buyer.

I bet you answered that you would take $110,000 from buyer 2 and you don't care where the money came from.
0 votes Thank Flag Link Sun May 6, 2012
While cash is good, generally the seller will want the highest net price for their home. If all things were equal, an all cash offer is usually preferred.
Good luck,
Suzanne Looker
0 votes Thank Flag Link Sat Apr 21, 2012
The seller gets cash either way. you can pay them cash or the bank that handles the mortgage can pay them cash. They will get 10,000 more by taking the other offer. As long as the other offer is from someone who is pre approved it is the better offer
0 votes Thank Flag Link Sat Apr 21, 2012
It's impossible to speculate all of the details of the transaction here....

Let's take this scenario and turn it around.

Say there are two homes that are completely identical. One home you can have in 10 days but you have to pay $10,000 more, the other you can have in 30-45 days but it's $10,000 less.

Which do you choose?

Well, if you were living in a hotel room with 3 kids, a dog, and an angry wife you would probably choose house #1 and cough up the $10k just to keep your sanity. If you were renting month to month and liked the home you were in you would probably wait the 45 days and save the cash.

The point being that the seller has their own motivations and it's not always easy to tell what they will do. The same with buyers..

Hope that helps put it in perspective.

I did a video blog post about this topic recently, check out the link below -
0 votes Thank Flag Link Fri Apr 20, 2012
What would you do if you owned this home & were selling it?
Would you take this same offer if the buyer was "strong" from a lending perspective?...
or would you sell it for $10,000 less?
0 votes Thank Flag Link Thu Mar 15, 2012
What would you do if you owned this home & were selling it?
Would you take this same offer if the buyer was "strong" from a lending perspective?...
or would you sell it for $10,000 less?
0 votes Thank Flag Link Thu Mar 15, 2012
Q: Why would the listing agent accept an offer that is $10,000 more than I offered, when I am a cash buyer?
A: Because it’s $10,000 more in the seller’s pocket when the deal is done. That’s a lot of money and, as pointed out below, even if the buyer is getting a loan, it translates to cash at the end of the transaction. There’s a misconception out there that if you offer cash, you can automatically get the property for less. It might work if you are buying a foreclosure AND if your offering price is marginally better than those with financing, however, normal sellers want as much as they can get. And it doesn’t matter if you offered more than asking – clearly someone offered more than you.

Additionally, as stated below, it’s not the listing agent who makes the decision – it’s the seller. I’m not going to second guess the listing agent, but if it had been me, I would have recommended to the seller that they counter the top offers to try to get you – the cash buyer – up to the same amount being offered by the highest bidder with a loan. Don’t know if that happened or not, but if you dug your heals in and wouldn’t go any higher, then I’d recommend to the seller that they accept the offer with the highest bottom line.

Keep in mind as well that if the transaction doesn’t appraise for the buyer with the loan, it may become available again. Have your agent talk to the listing agent to make sure you are in a back-up position … just in case.
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0 votes Thank Flag Link Thu Mar 15, 2012
Cash is not necessarily king. Wouldn't you want 10k more if you were selling your home. Money is money no matter what form it's in. sometimes you may get lucky not always.
0 votes Thank Flag Link Wed Mar 14, 2012
The seller gets all cash in every deal I close, they won’t take bananas even if you give them a great deal compared to the banana index. You just offered less cash.
0 votes Thank Flag Link Tue Feb 28, 2012
there is a lot more to an offer than the price. time to close, inspections requested, costs allocated between buyer and seller.... the closer you are in your offer to meeting the sellers needs (which are not necessarily only the price!) the better chance you have of getting your offer accepted. it is your agents job to find out what the seller wants. at least, that is what i do, and when my buyers listen to me, they are successful.
0 votes Thank Flag Link Mon Feb 27, 2012
Hi Lisa, multiple offers are occuring more frequently in many markets. The property must have been priced very smartly to cause to get this reaction. Dust off and go after the next one! As a cash buyer, you will want to be sure to provide verification of funds with your offer.

Good luck to you!
Jeanne Feenick
Unwavering Commitment to Service, Unsurpassed Results
0 votes Thank Flag Link Mon Feb 27, 2012
Hi Lisa,
It would be the seller who would be accepting the offer for $10,000 higher than your cash offer; not the agent. The reason for this .....sellers are looking for the highest price. If a buyer is pre-approved, he is credit worthy and the funds will be available at the closing table.
Web Reference: http://ninaharrishomes.com
0 votes Thank Flag Link Mon Feb 27, 2012
Thanks for all your answers. I am a sincere and committed buyer, I assure you. I have heard of many, many instances where the "solid" buyer has the deal fall through...hence my question. BTW, I offered $20,000. more than the asking price.
0 votes Thank Flag Link Mon Feb 27, 2012
If you will be able to pay me $10K more for my home if you get a loan, then by all means get a loan. I would like the extra $10K please.
0 votes Thank Flag Link Mon Feb 27, 2012
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