Here is why the bank took a lower cash offer over your offer on the West Bloomfield home.
Cash deals are usually king. The banks will usually take the cash offer over a mortgage offer.
Banks prefer cash deals for these reasons:
- cash deals can close within a month. They close quicker than mortgage deals that take 30 to 60 days..
- 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 can still close.
- 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 will be accepted when there are repairs that will need to be completed for a FHA loan, VA loan, or a conventional loan.
- 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. I lost a deal on a piece of Livonia real estate on a cash offer. The list price on the Livonia ranch was $61,000. My clients bid $81,000. The bank accepted an offer of $55,000.
That was a $26,000 difference.
I hope this explains why the bank took a lower cash offer on the West Bloomfield real estate you loved. So if you can afford it, bid cash.
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