and the Westland real estate market. Yes it has been a bad day. Two of my clients lost out on their bids on homes they wanted. One home was listed at $18,000 and sold for $28,000. My client was an investor and was trying to get the house for as little as possible. He didn’t want to pay $28,000. It would not have been profitable for him to buy it.
The other home was was listed at $139,000. I was notified today that they were working with somebody that offered $165,000 cash. We were under that price and my client thought they were offering more than enough. I had asked them twice if they wanted to go higher. My guess was that it would go for $170,000.
I was close but even if we would have bid $170,000 we would have lost. We needed seller’s concession’s so we would have been under the $165,000 cash bid. We would have had to bid about $180,000. But even then we might have lost it. Why you ask? Banks prefer cash deals for these reasons:
- cash deals close within a month. They close quicker than mortgage deals.
- cash deals don’t require an appraisal. There is no chance that the deal will fall apart because the house didn’t appraise.
- cash deals don’t have a mortgage. The deal can’t fall thru because of mortgage problems such as debt ratios, and underwriting issues.
- cash deals don’t depend on the buyer having a job. If the buyer loses their job on a mortgage deal the deal is dead. With cash deals it still closes.
- cash deals have already proved they have the money. When you put in a cash offer you must get a proof of funds letter. The letter comes from your bank and states that you have a certain amount of money in your account.
- cash deals don’t have an out. If you don’t close with a cash deal you lose your money. If you have a mortgage you can get your deposit back if the house doesn’t appraise or if the mortgage doesn’t go through.
Many times banks will take a lower cash offer over a mortgage offer. It just depends how big of a difference there is.
But the bottom line is my clients didn’t want to go higher in price. They have been approved to go higher, but they are smart. They want to live within their means. So a $180,000 offer would not been in their minds. Plus a $180,000 offer may not have gone through any way. That would have been the highest price in the subdivision. It may not have appraised.
This has been my day. One house went 50% over list and the other went $26,000 over list. It’s just another day in the life of a Metro Detroit real estate agent. I feel bad for my clients today, but hopefully my client will feel better after the disappointment.
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