Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
What some don't realize no matter how many times we argue about it, is the buyer who can qualify for 100% of the loan from income alone, is actually a stronger buyer than the one who for all you know, can only qualify for 80% of the loan, who can then only afford the house if they don't have a last minute emergency that dips into that cash reserve they may well have gotten from Mom and Dad.
Someone who qualifies for the whole amount just by walking in with a pen, has far more options than the person who only qualifies if they also bring $30K to the table. The first can choose how much down to put in, and it really shouldn't matter to the seller.
IOW, there's nothing that is automatically "more qualified" about a buyer who is choosing to put more or less down or choosing a conventional loan if they could get a much lower interest VA loan. Down payment is not the whole picture. Only their lender knows the whole picture and the lender really makes the most difference to me. I would trust a VA loan with zero down from a local lender I know and trust and can call and verify and get updates from, than I would a conventional from a national outfit and an 800 number to someone in Phoenix.
With record low interest rates, someone with a lot of cash might well be WAY smarter to get a mortgage for as much as possible and put their cash money in income producing investments. If you can make over 8% on that money from smart investment, and pay only 2.5% to borrow it, most people would not have trouble figuring which will make you more money.
My metrics have more to do with people - the agent and the lender - who seem good or not to work with, who have a proven track record of solving problems, rather than myopic rules that may not even make good financial sense for everyone.
You're only seeing a small part of a person's financial picture on an offer. Don't assume that's all there is... Investigate and have your agent talk to the brokers and lenders involved to get the bigger picture.
What some don't realize no matter how many times we argue about it, is the buyer who can qualify for 100% of the loan from income alone, is actually a stronger buyer than the one who for all you know, can only qualify for 80% of the loan, who can then only afford the house if they don't have a last minute emergency that dips into that cash reserve they may well have gotten from Mom and Dad.
Someone who qualifies for the whole amount just by walking in with a pen, has far more options than the person who only qualifies if they also bring $30K to the table. The first can choose how much down to put in, and it really shouldn't matter to the seller.
IOW, there's nothing that is automatically "more qualified" about a buyer who is choosing to put more or less down or choosing a conventional loan if they could get a much lower interest VA loan. Down payment is not the whole picture. Only their lender knows the whole picture and the lender really makes the most difference to me. I would trust a VA loan with zero down from a local lender I know and trust and can call and verify and get updates from, than I would a conventional from a national outfit and an 800 number to someone in Phoenix.
With record low interest rates, someone with a lot of cash might well be WAY smarter to get a mortgage for as much as possible and put their cash money in income producing investments. If you can make over 8% on that money from smart investment, and pay only 2.5% to borrow it, most people would not have trouble figuring which will make you more money.
My metrics have more to do with people - the agent and the lender - who seem good or not to work with, who have a proven track record of solving problems, rather than myopic rules that may not even make good financial sense for everyone.
You're only seeing a small part of a person's financial picture on an offer. Don't assume that's all there is... Investigate and have your agent talk to the brokers and lenders involved to get the bigger picture.
I think this is a sensible and balanced approach to the situation. Thanks, Diana.
What some don't realize no matter how many times we argue about it, is the buyer who can qualify for 100% of the loan from income alone, is actually a stronger buyer than the one who for all you know, can only qualify for 80% of the loan, who can then only afford the house if they don't have a last minute emergency that dips into that cash reserve they may well have gotten from Mom and Dad.
Someone who qualifies for the whole amount just by walking in with a pen, has far more options than the person who only qualifies if they also bring $30K to the table. The first can choose how much down to put in, and it really shouldn't matter to the seller.
IOW, there's nothing that is automatically "more qualified" about a buyer who is choosing to put more or less down or choosing a conventional loan if they could get a much lower interest VA loan. Down payment is not the whole picture. Only their lender knows the whole picture and the lender really makes the most difference to me. I would trust a VA loan with zero down from a local lender I know and trust and can call and verify and get updates from, than I would a conventional from a national outfit and an 800 number to someone in Phoenix.
With record low interest rates, someone with a lot of cash might well be WAY smarter to get a mortgage for as much as possible and put their cash money in income producing investments. If you can make over 8% on that money from smart investment, and pay only 2.5% to borrow it, most people would not have trouble figuring which will make you more money.
My metrics have more to do with people - the agent and the lender - who seem good or not to work with, who have a proven track record of solving problems, rather than myopic rules that may not even make good financial sense for everyone.
You're only seeing a small part of a person's financial picture on an offer. Don't assume that's all there is... Investigate and have your agent talk to the brokers and lenders involved to get the bigger picture.
What's missing here is the person who doesn't need to "put money elsewhere." Thats who we ideally like to sell to. Has cash, could even pay cash if it didn't make sense to get a tax shelter mortgage, has other investments or not but isn't hamstrung so much they miss that 20%. Isn't borrowing everything they could (because banks will give away much more than people will be able to pay back). Isn't at the tippy top of their budget. That's our buyer. The "good" offer. Doesn't have a house to sell, or if they did, can carry both and won't do a contingency. Doesn't want a bunch of crazy additional contingencies.
And yes, checking out the agent and lender is as important as checking out what kind of job this buyer has and their ability to get to the end date.
You can definitely have both a buyer who could afford to borrow more and still has a lot to put down. Those buyers are out there. We like them. I don't say they are more qualified. I say thars the better offer, according to our metrics. Which was the thread topic.
Agents often have ideas about what a good offer is and will try to stretch a sellers opinion to get the deal done. I can appreciate that as they want to get paid too. I just know what works for us. It really makes no difference if it works for anyone else.
I'm just not going to argue this. We have two people complaining who sold maybe 3 houses total each. As an average overleveraged homeowner reviewing the offers of other average homeowners im sure whatever the buyers put down seemed fine.
As professional investors who have bought and sold close to 40 residential properties in the last decade, and been in business close to 20 years, we have developed our own metrics on what kind of offers appeal to us. Do we always have the luxury of multiples? No. But we have had ot often enough to be confident about what will win the bid. We have made mistake a few times and chosen those with nothing or scant down payments, and learned from those instances where loans did not close timely. We review and research everything and everyone in a transacyion...buyer, buyers agent, lender, etc. We have also worked with investors and second home buyers where you have to put at least 20% to even qualify for that sort of loan.
This is what works for us. Perhaps it seems too conservative for others. In which case, there are plenty of buyers who refuse or can't put much down that you are able to invite to your home sale. They won't win the bid in a multiple offer situation, and they won't stack up to the metrics many have posted, including ours.
I don't know why this offends anyone. Its working for us. We aren't nasty about not accepting offers with zero down. We don't counter with "your offer sucked!" We just counter with our terms. Again it also depends on the market. Sometimes you just have average to below average offers coming in. But if im ranking or sharing what I want to see, I have. Simple as that.
Who cares if you buy and sell more real estate than me? I don’t do real estate as a gig. I buy and sell primary residences and I live in them a long time (like many people do). And so what? Doesn’t mean your words hold any more weight than mine because I’ve had success in real estate as well. I’ve been an owner for 24 of my 45 years. All of my homes sold at a profit, to actual people not investors, and to be honest, real estate has been very kind to me. I made double what I paid for my nyc condo and as a 28 year old, that was a lot of money.
And as I said as a homebuyer, all of my offers—whether you believe they are good or not—have been accepted and I’ve gotten the house. That’s all I care about and I’m sure all many others others about as well.
Perspective. Others are trying to offer theirs and you can only see one. In fact there's all kinds of successful ways to manage both investment and real estate.
You're good at doing you though, and that's fine. For you.
Last edited by Diana Holbrook; 10-25-2020 at 11:27 AM..
Perspective. Others are trying to offer theirs and you can only see one. In fact there's all kinds of successful ways to manage both investment and real estate.
You're good at doing you though, and that's fine. For you.
I'm not arguing. I answered the questions asked. We *have * taken the sorts of offers others described and were burned. As they say, once burned, twice shy. If there are other options, why not avoid what didn't work in the past? Foolish not to.
I have worked with many agents over the years and understand why you are trying to sell different sorts of loan products and buyer situations. Its just not something that works for us. Im sure you have clients who don't want to deal with certain things, don't like certain properties or features, avoid certain lenders or first time buyers, etc etc. And as their representative, you respect those parameters and don't pressure them to get involved with something they have said won't work. Im not sure why this is in any way controversial.
Again there was a question asked in the OP. I answered it. There is just no reason for debate or sidetracked hurt feelings/straw man arguing. It would be great to hear others chime in on their metrics. I have shared more than enough about ours.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
