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I'm really just venting my nervousness! We are selling our house "as is" as a teardown and have to decide between a cash offer from a developer and a $14K higher 90% mortgage offer plus $9000 cash at closing from an individual. We have a copy of the pre-approval letter. We would prefer to close quickly so I know the cash offer is better for that, but the extra $23K would sure come in handy for our next home. The individual is an established businessman and our last tax appraisal is at that 90% of offer figure. We've also had three other offers at and above that 90% figure. Zilllow has us way way higher but I doubt the mortgage appraiser will count that .
We're really torn and my husband is letting me do all the legwork so it's a lot of pressure. So I wanted to share the pressure .
Cash is a sure thing an approval letter is tentative. That 23k won't matter much when the financing is not approved and the cash offer walked away and already spent the money on something else.
Yes, a lot could go wrong. But that doesn't mean it WILL go wrong. And an extra $23000 is enough money for a lot of people to reasonably decide to take the risk of an extra few weeks. The OP has had 3 viable offers at this point, and even if the higher offer didn't go through, it seems like they would be able to go back to one of the other potential buyers or find another buyer.
Of course, that's just for a significant enough different. What I would be willing to risk for an extra $20K+ is different than if the extra amount is $2-3000.
In this case, assuming the $620K offer is another cash offer, that seems much more reasonable to me do decide that the sure thing for a couple of thousand less is better.
Well, it all comes down to risk tolerance. The mortgaged offer was really only $14K above the first cash offer, with $9K for selling personal property. For me, $14K is not that huge a difference to walk away from a quick close and assurance of cash in my hand. Again, you have to look at the actual offer and from what details the OP has provided, among other things that it's only a 10% downpayment, it's not like that mortgaged offer is all that strong. You're also making assumptions that OP will be able to achieve similar offers after being off the market for 30+ days; in my experience, that has rarely been the case, as most buyers tend to believe that something is "wrong" with a property re-entering a market and rarely offer full ask, or close to it.
Agree with you that OP's latest offer, provided it's cash, is a far better offer and one he should probably accept.
Yes, a lot could go wrong. But that doesn't mean it WILL go wrong. And an extra $23000 is enough money for a lot of people to reasonably decide to take the risk of an extra few weeks. The OP has had 3 viable offers at this point, and even if the higher offer didn't go through, it seems like they would be able to go back to one of the other potential buyers or find another buyer.
Of course, that's just for a significant enough different. What I would be willing to risk for an extra $20K+ is different than if the extra amount is $2-3000.
In this case, assuming the $620K offer is another cash offer, that seems much more reasonable to me do decide that the sure thing for a couple of thousand less is better.
It already went wrong. When I come out to appraise the house and it is not in average or better condition, loan declined.
The mortgagee dropped out last night - I think he might have overextended, or realized that I was starting to question his position. Part of the issue is we're asking for extended post possession, which is fine with the builders (they're agreeing to four to six months), but a problem with a mortgage. I'd already decided not to risk it anyway. Now we have a solid $602 cash contract offer, and two tentative higher from other builders (so far just in emails; asked for contracts today). It's been an interesting process...
OP mentioned that it was a 10% down mortgage, not a construction loan; those are two very different animals, hence all the comments regarding a bank's unwillingness to finance.
A construction loan is really just a type of mortgage. It just has a lot more hoops to jump through. However, the loan is still secured by the property itself. They just loan you more than the property is worth so that you can build on it.
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Originally Posted by jackmichigan
Haha! You're both wrong! The undisputed teardown capitol is actually Detroit. They're just not building that many replacements.
You may be right.
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Originally Posted by CatWarmer
Chicago suburbs; would rather not be more specific.
A construction loan is really just a type of mortgage. It just has a lot more hoops to jump through. However, the loan is still secured by the property itself. They just loan you more than the property is worth so that you can build on it.
Agreed, but at least in my experience, you're typically not getting a construction loan product with only 10% down, since it's a much riskier loan product for the bank. Hence, the assumptions that it was just a run of the mill mortgage; moot point now though.
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The undisputed teardown capitol is actually Detroit. They're just not building that many replacements. 
