Monday, February 22, 2010
Tips for Beating out Cash Offers
Dear Sue,
I am a first time buyer attempting to take advantage of the $8000.00 tax credit and low interest rates. I have been looking at homes from Colfax to Roseville. I have made over a dozen offers only to be out bid by cash investors and other buyers.
I know that I have to be in contract before the tax credit expires. I am just so frustrated I can hardly stand it. No matter what I do my offers flub!
Can you give me some pointers on how to structure my offer so it will be accepted?
Frustrated Francis
Dear Francis
Investors paying cash are driving today’s market. It’s tough to beat cash. “Cash is King!”
You can however, structure your offer in ways that will make it hard for the seller to ignore.
Begin with price. If you haven’t been offering full price and then some, think again. The best deals are receiving multiple offers at higher than list price. While the highest priced offer is not always the “best”, it doesn’t hurt. Price will definitely be one of the main factors that will be considered.
The deposit known as earnest money is also important. The larger the deposit the better. A minimum of 1% is recommended. Make it 3% if you can handle it. The deposit is a good indication of how serious you are as a buyer.
If you are like most first time buyers your financing will be FHA or USDA. You will probably be asking for a 3-31/2% credit from the seller for recurring and non-recurring closing costs. If you are, I recommend that you add the requested credit to the offer price. For example, the property is listed at $100,000.00. The comparable sales in the area show that the property is undervalued by approximately $5000.00. You want to make an offer that nets the seller $105,000. You also want a 3% credit for closing costs back from the seller. Make an offer for $108,500.00. The seller is more interested in the bottom line than the top line!
Clean, clean, clean means “as-is” subject to inspections. Your deposit will be protected during the inspection period. This is the time you are allowed to inspect the property and make your investigations without jeopardizing your deposit. Many buyers believe that “as-is” means that they have to go through with the purchase no matter what they find. Not so! Buyers can cancel without penalty if they do it within their time frames. The cleaner the offer the better the offer.
Since the bottom line is such an important factor I suggest that you make it look good by offering to pay for all of the inspections. That includes septic pumping, well testing, pest and professional home inspections even the home warranty. It may be costly, but it will be better than losing a property that you really want. It’s also good for you to have control over those inspections. You might say that it’s a cost of doing business in the current market.
Time has value. The shorter the contingency period and the quicker the escrow, the better. Time is of the essence.
I hope this advice will help you get your next offer accepted. Using these tips can be a matter of good home dollars and sense. Please let me know how it goes!
For more Home $$s and Sense:
www.seehometown.com
I am a first time buyer attempting to take advantage of the $8000.00 tax credit and low interest rates. I have been looking at homes from Colfax to Roseville. I have made over a dozen offers only to be out bid by cash investors and other buyers.
I know that I have to be in contract before the tax credit expires. I am just so frustrated I can hardly stand it. No matter what I do my offers flub!
Can you give me some pointers on how to structure my offer so it will be accepted?
Frustrated Francis
Dear Francis
Investors paying cash are driving today’s market. It’s tough to beat cash. “Cash is King!”
You can however, structure your offer in ways that will make it hard for the seller to ignore.
Begin with price. If you haven’t been offering full price and then some, think again. The best deals are receiving multiple offers at higher than list price. While the highest priced offer is not always the “best”, it doesn’t hurt. Price will definitely be one of the main factors that will be considered.
The deposit known as earnest money is also important. The larger the deposit the better. A minimum of 1% is recommended. Make it 3% if you can handle it. The deposit is a good indication of how serious you are as a buyer.
If you are like most first time buyers your financing will be FHA or USDA. You will probably be asking for a 3-31/2% credit from the seller for recurring and non-recurring closing costs. If you are, I recommend that you add the requested credit to the offer price. For example, the property is listed at $100,000.00. The comparable sales in the area show that the property is undervalued by approximately $5000.00. You want to make an offer that nets the seller $105,000. You also want a 3% credit for closing costs back from the seller. Make an offer for $108,500.00. The seller is more interested in the bottom line than the top line!
Clean, clean, clean means “as-is” subject to inspections. Your deposit will be protected during the inspection period. This is the time you are allowed to inspect the property and make your investigations without jeopardizing your deposit. Many buyers believe that “as-is” means that they have to go through with the purchase no matter what they find. Not so! Buyers can cancel without penalty if they do it within their time frames. The cleaner the offer the better the offer.
Since the bottom line is such an important factor I suggest that you make it look good by offering to pay for all of the inspections. That includes septic pumping, well testing, pest and professional home inspections even the home warranty. It may be costly, but it will be better than losing a property that you really want. It’s also good for you to have control over those inspections. You might say that it’s a cost of doing business in the current market.
Time has value. The shorter the contingency period and the quicker the escrow, the better. Time is of the essence.
I hope this advice will help you get your next offer accepted. Using these tips can be a matter of good home dollars and sense. Please let me know how it goes!
For more Home $$s and Sense:
www.seehometown.com
# posted by Sue Thompson @ 2:43 PM 
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