Buying and selling a home has recently become a dilemma. 

The question is when do you start looking for a home?  

You are eager to start looking for your dream home and when you find it, you will have to put in the contract that the offer is contingent upon you selling your home. If you do not have to sell your home to purchase another one, this does not apply.      

In today’s market, some homes are selling on the first day. The real estate market is experiencing a lack of homes for sale. Thus, the sellers can be choosy on what they will accept on price and contingencies.

So, let’s look at this scenario from the seller’s perspective. The seller would like to get top dollar for his home. If they have their home in excellent condition, they may have multiple offers above the asking price.  If the seller has multiple offers, all the offers will be presented to the seller, and they will take into consideration many things. The highest offer does not necessarily mean the offer will be the one accepted. The seller will look at all the contingencies. 

Is it contingent upon an appraisal? 

How many days is the due diligence period? How many days is the loan contingency? 

How many days to close? 

How much escrow money has been put down? 

What are they asking the seller to throw in on the deal? 

What is the biggest factor that will have precedence? 

Is the offer contingent upon getting a loan?   Cash, most of the time, will take precedence.  

So, let’s look at this situation from the buyer’s perspective. The buyer brings in an offer above the sellers asking price, and dollars above the other offers. The buyer’s offer is a clean offer and does not ask the seller for menial repairs and throw-ins but submits a loan contingency document with his offer.  Attached is a letter from his loan company that he is pre-approved. If they are getting a loan, the loan company will most likely have an appraisal. This will raise a red flag to the seller, even if the price offered is above the others submitted. If all things are the same, cash is always the trump card.

It is often disappointing to a buyer when his offer is rejected. A buyer many times has the cash, but with the low interest rates they prefer to take out a loan and take their cash down a different avenue.    

Something to think about: If the seller is looking at an offer that is bringing them substantially a lot more money, do you take the chance that the offer could go south because of a loan contingency, and it doesn’t appraise? Repairs will also play into the picture.  

We have presented just one of the scenarios that buyers and sellers may encounter. 

This gives you something to think about.  

 

Thought for the Day: Life is like a camera:  Focus on what is important, capture the good times, develop from the negatives, and if things don’t work out, take another shot.