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Old Today, 04:26 PM
 
9 posts
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Hi all,

Lost out on a home recently and looking for a way to improve the attractiveness of an offer.

We are fortunate enough to be in a position where we could make a "cash" offer at the price range we are looking at. However, to do this would require liquidating investments that I I would prefer to keep in the market.

Is is possible to make a "cash" offer on a home, showing a brokerage statement, for example, as proof of funds and - at the same time - apply for a mortgage on the property?

Basically, my thought is I could "show" that I can pay for a home in cash, but if my mortgage is approved/ready, etc. by the time we close, then I'm going to go ahead and use that. Basically, I'll take on all the risk of getting financing, appropriate rates, appraisal, etc.

I did pose this to my relator who said this amounted to a "bait and switch" and advised me against it. I'm understand her point of view, but also not sure I agree - if I can guarantee the seller the funds - one way or another - why would they care where they ultimately come from?

Appreciate any thoughts.

Edit to add: Am aware of cash-out Refi, etc. What I have read seemed to say fees/rates are higher in this situation, but open to learning more...
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Old Today, 04:35 PM
 
Location: planet earth
8,550 posts, read 3,814,523 times
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You're Realtor is right.

It's pretty basic.

If you put something in a contract, you have to live up to it or there will be repercussions.

Not sure why you would think it's okay to lie but I don't understand the behavior or morals of a lot of people these days.

If I was your Realtor, I would fire you, asap.
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Old Today, 04:39 PM
 
Location: Rochester, WA
9,238 posts, read 5,958,528 times
Reputation: 24811
Besides the bottom line price, the thing that is usually most attractive about the cash offer is the time. You can, with cash, promise a short closing time frame, even a couple weeks. Shorter than you could probably get with most loans. I know a guy who can do a three week loan close, but not two.

That's not the deciding factor in all cases... but it would be worth knowing what is the most important term in the offer... the price, or the timing? Or some other flexibility?
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Old Today, 04:51 PM
 
9 posts
Reputation: 15
Quote:
Originally Posted by nobodysbusiness View Post
You're Realtor is right.

It's pretty basic.

If you put something in a contract, you have to live up to it or there will be repercussions.

Not sure why you would think it's okay to lie but I don't understand the behavior or morals of a lot of people these days.

If I was your Realtor, I would fire you, asap.
LOL. Well that's just a BIT harsh, don't you think?

My morals are just fine. What does the seller care where the money comes from? If I can't arrange the mortgage, then I'd pay cash. I'm failing to see how cash from a mortgage bank would be any different than cash from my brokerage to the seller at close. If you want to explain that to me instead of making a ridiculous accusation about my character, I'd love to hear WHY it would make a difference.

I'm not asking the question to "justify" myself, I'm genuinely interested in understanding why this would make a difference if all the risk was on me. Hell, I'd be willing to put it in the contract stating exactly what I intended to do. Seller gets all the benefits and none of the risk.

So do you want to be a little less of a jerk and make a thoughtful response?
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Old Today, 04:55 PM
 
9 posts
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Quote:
Originally Posted by Diana Holbrook View Post
Besides the bottom line price, the thing that is usually most attractive about the cash offer is the time. You can, with cash, promise a short closing time frame, even a couple weeks. Shorter than you could probably get with most loans. I know a guy who can do a three week loan close, but not two.

That's not the deciding factor in all cases... but it would be worth knowing what is the most important term in the offer... the price, or the timing? Or some other flexibility?

Thank you for your response, Diana. Unlike the post above you that impugns my character, I understand your point.

So I need to learn more - but it seems what would be better here would be a cash-out refinance then? Are there downsides I should be aware of? I am aware it could fail inspection and not be able to get a mortgage, or not appraise appropriately, etc. Are there other major risks?
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Old Today, 05:01 PM
 
11,376 posts, read 9,238,691 times
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The mortgage can't be part of the closing. You would have to come back to the seller and ask for changes. Hence, it's a bait-and-switch because it's possible that you walk away if he says no. How do you include that contingency in the original contract? You don't or they'll smell a rat right away.

It smells of someone who wants to make a low-ball offer but doesn't want to commit cash. The price will ultimately determine who get the house unless its condition or unique qualities has limited its market.

Last edited by lchoro; Today at 05:12 PM..
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Old Today, 05:08 PM
 
1,758 posts, read 839,265 times
Reputation: 6289
Quote:
Originally Posted by nyc2pit View Post
Hi all,

Lost out on a home recently and looking for a way to improve the attractiveness of an offer.

We are fortunate enough to be in a position where we could make a "cash" offer at the price range we are looking at. However, to do this would require liquidating investments that I I would prefer to keep in the market.

Is is possible to make a "cash" offer on a home, showing a brokerage statement, for example, as proof of funds and - at the same time - apply for a mortgage on the property?

Basically, my thought is I could "show" that I can pay for a home in cash, but if my mortgage is approved/ready, etc. by the time we close, then I'm going to go ahead and use that. Basically, I'll take on all the risk of getting financing, appropriate rates, appraisal, etc.

I did pose this to my relator who said this amounted to a "bait and switch" and advised me against it. I'm understand her point of view, but also not sure I agree - if I can guarantee the seller the funds - one way or another - why would they care where they ultimately come from?

Appreciate any thoughts.

Edit to add: Am aware of cash-out Refi, etc. What I have read seemed to say fees/rates are higher in this situation, but open to learning more...
I don't see a problem at all in doing that provided that you close the deal on time. I don't think that 99% of the sellers would care either if they get their money as agreed in the contract.

The main reason for specifying a mortgage loan in the contract is that it becomes a contingency which gives the buyer an "out" if he/she can't get the loan. I'm sure that there are numerous buyers of some financial means who do various transactions to raise cash to close a "cash deal" on time.

In short, no problem at all as long as your mortgage loan doesn't impose some additional cost or delay in closing on the seller that they wouldn't incur in a cash deal. Just be aware that if your plan to get a mortgage loan on the property you're buying doesn't materialize, then you'll likely lose any earnest money deposit plus be subject to being sued for damages for breach of contract.
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Old Today, 05:10 PM
 
9 posts
Reputation: 15
Quote:
Originally Posted by lchoro View Post
The mortgage can't be part of the closing. You would have to come back to the seller and ask for changes. Hence, it's a bait-and-switch because it's possible that you walk away if he says no. How do you include that contingency in the original contract? You don't or they'll smell a rat right away.
Ichoro -

I see your point about "lowball" and that makes sense. This particular situation was a full-asking-price offer. TBH, the hold up was that another buyer was willing to waive inspection .... on a 167 year old house. I wasn't. So I lost.

My point here was thinking about OTHER ways I could have made my offer more attractive overall. People talk about cash offers all the time. I COULD do a cash offer, but I don't WANT to have all of that money tied up in my house. I've done quite well in the market over the last year and - for now- I want that cash to stay there. So if I could guarantee to the seller that I'll close either with my own cash, or a mortgage if I can get it in time, then that would seem to be a reasonable compromise - maybe more attractive to a seller, and gives me the option to try to get the mortgage together ahead of time and not have to pull funds from the market.

I am not a lawyer, so I have no idea how to include a contingency like that, but I also wouldn't think it is impossible.

"Buyer will guarantee sale with cash proceeds as demonstrated on brokerage statement provided with offer. Buyer requests right to apply for a mortgage at his/her own risk, and if approved, said funds may be substituted for brokerage funds at closing. If buyer cannot secure mortgage in agreed-upon timeframe, then agreement proceeds with cash offer as above."

IANAL but I'm sure someone could write that up much nicer than I could.

There are much more "creative financing" type deals done everyday - I'm kinda surprised that the sentiment is that we are so rigid in our ways of buying and selling houses that there can be no possible way to look at something from a new perspective.

Diana raises a good point about speed - in my situation, I wasn't looking for a fast close and neither was the seller, so I would have had time to get all my ducks in a row.....
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Old Today, 05:14 PM
 
9 posts
Reputation: 15
Quote:
Originally Posted by Chas863 View Post
I don't see a problem at all in doing that provided that you close the deal on time. I don't think that 99% of the sellers would care either if they get their money as agreed in the contract.

The main reason for specifying a mortgage loan in the contract is that it becomes a contingency which gives the buyer an "out" if he/she can't get the loan. I'm sure that there are numerous buyers of some financial means who do various transactions to raise cash to close a "cash deal" on time.

In short, no problem at all as long as your mortgage loan doesn't impose some additional cost or delay in closing on the seller that they wouldn't incur in a cash deal. Just be aware that if your plan to get a mortgage loan on the property you're buying doesn't materialize, then you'll likely lose any earnest money deposit plus be subject to being sued for damages for breach of contract.
Chas - your thoughts and mine agree. Maybe I didn't elucidate it clearly enough, but what you're saying is how I was thinking about it.

I would have waived the mortgage contingency. If I couldn't get a mortgage for some reason, I would have proceeded to close with cash and then dealt with it on the back end. So the bait-and-switch thing is hard to understand...

Diana made the point about speed - in this specific situation it didn't make a difference, but it would make sense to me that in many situations, that would be the benefit of cash (fast close).

Certainly the deal "looks" more complex to a seller, and that's a negative but ... I can't be the first person in the world to have thought about this or had a desire to do something similar.
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Old Today, 05:23 PM
 
9 posts
Reputation: 15
Found this as well:

[url]https://www.city-data.com/forum/mortgages/2773127-mortgage-purchase-house-cash-then-cash.html[/url]

Post #7 and beyond .....

"Easier to get the loan at closing" - makes sense ....

Post #10 - "most contracts now allow for the borrower to change how to pay for the property, as long as there is no net effect on the seller."

That is precisely my question. Not sure that's the case in my state as our offer did list financing. But if one waives the "mortgage contingency" then .... what is the issue to the seller?
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