clong25, Home Buyer in Oak Lawn, IL

if purchasing a government owned home, where there are many bidders, does the cash offer have advantage over the higher bidder who is financing?

Asked by clong25, Oak Lawn, IL Tue Jul 9, 2013

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Jim Walker, Agent, Carmichael, CA
Tue Jul 9, 2013
My answer is NO!
The win almost always goes to the high bidder on HUD home home. (Net proceeds to HUD) Maybe someone can cite an exception to the rule*.

Scott G's answer about contingencies often applies to homes that are not government owned, but other bank or privately owned. Scott, did you skip over the word "government" in clong's question?

*For example: Some HUD homes can be bought for less than high bid by owner occupant teachers or policeman, some can be bought for less than high bid by certain non-profit housing agencies. But these exceptions are related to the characteristics of the buyer, not the financing.
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Scott Godzyk, Agent, Manchester, NH
Tue Jul 9, 2013
YES but only if you are also waiving contingencies such as inspections. It is the contingencies that hurt and offer more than anything.
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Sue Archer R…, Agent, Palm Harbor, FL
Tue Jul 9, 2013
Government homes that I would think you're referring to are Fannie Mae, HUD, or (less frequently) Freddie Mac. Both Fannie Mae and HUD start with an online application. As Sheryl had mentioned, they give preference to an owner occupied home and only consider those for the first two weeks. (NOT a good idea to misrepresent your intention. That's fraud and expect prosecution. They are monitoring that. )

Cash can influence the decision if you are offering to pay the difference between the offer price and the appraised value, or can offer to close in a shorter time frame. All cash could be a help if there are condition issues with the home that the seller believes may affect the buyer being able to get the home financed, but that could also be addressed by offering with an FHA renovation loan.

There are definitely nuances to negotiating your offer to be selected so select a realtor who has experience and not your brother or friend who does it part time after work. You are competing. High net value where there are no issues on condition will have you selected as the buyer even if you aren't all cash. Good luck!
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Joseph Drew, Agent, Sacramento, CA
Tue Jul 9, 2013
I answer the question in Context to HUD homes, because that is where I have had the most experience. HUD looks at the NET, they want the most money for the home. So, while with normal bank owned foreclosures, they look at cash with a preference.

I think the thing to also keep in mind is that the market has shifted and most areas are experiencing a seller's market with low inventory. Purchasers need to adjust what they offer accordingly.
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Annette Law…, Agent, Palm Harbor, FL
Tue Jul 9, 2013
A financed offer can be made as competive as a cash offer.
The buyer MUST choose the right lender which will exclude Bank of America, Chase, Wells Fargo and on of the other 11 biggies.
The buyer MUST waive or protect the seller in the event of a FIAT appriasal.
INspect before making offer and waive inspections contengency.
Close within 4 weeks.
Offer market value and ignore the 'advertised' price.

Start Packing.
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