Friday, March 21, 2014

Why Are "All Cash" Offers Considered Better Than Ones With Loans?

This is a very important topic if you are looking to buy a home so read on...
Have you ever wondered why offers that are using all cash are viewed as a better choice than ones that are taking out loans?  Doesn't the seller get their "cash" in the end once the house is bought whether it comes from under someone's mattress or a bank?  The answer is yes. Once the deal is done, the seller will get their proceeds whether you got a loan or paid all cash.  But an all-cash offer is better for one Big don't need a loan to buy the house.  Okay...well that is an obvious statement, but so what? Right? are very hard to get these days and just because a loan officer pre-qualifies you to get one, doesn't mean that you will.  And it happens All the time! I can't tell you how many people I have seen go to some bank or online loan place and get qualified only to be knee-deep into buying a house then get denied.  Or better yet, all the sudden the loan people want 'this', 'that', and 'the other' from the buyer to get them the loan and it puts a tremendous stress on the sale process which can either delay the sale, cost the buyer money because now they have to pay a per-diem to the seller because they aren't closing on time, or even worse, loose the buyer's deposit.  And some of the things I've heard from loan officers that they need in order to proceed with the loan can be things like a receipt showing where the money for $400 cash deposit into your bank two month ago came from, or asking the buyer or seller to fix the cosmetic crack in the ceiling before proceeding and prove it is fixed by having someone come out and check it, or removing a 6'x6' wooden platformed deck in the back yard and getting city permits to do so, before the end of the sale.  Or then they can always simply say you don't make enough money, even though everything seemed fine a month ago when you got pre-qualified.  The list goes on with the number of things that can happen with a loan in the middle of a deal.  So not having to bother with a loan can be a much better choice. But if your agent conveys to the selling agent that the loan officer being used is a good/trusted source, or the selling agent happens to know them (and we use some of the same guys around town because we know they are good) then your offer will stand a better chance if you are up against an all-cash offer.  And even if you aren't competing with all-cash, get a good loan officer just for your own good.

So, the lesson here for all the buyers out there looking to buy is, get a loan officer that is recommended to you or is connected somehow with your agent.  I have a few that I always recommend to my clients and I know people have to be thinking "What do I get from recommending these loan officers?" I'm sure some people think we get money or something from it, right?  Well, I don't think the loan officers I've recommended for years have even bought me so much as a cup of coffee.  But what they do for me is get the loan done.  And if things get harry in the middle of a transaction, I can just pick up the phone and talk to them and get answers.  This isn't the case with some of the random loan officers some of my clients are using.  I've called some of these guys for days with no return phone call or email which makes me nuts because these are my clients and their money is on the line and its my job to try to make sure things don't get scary.  But with a loan officer I know who I've seen get the job done time and time again, not only can I easily reach them for answers, I can also hold their feet to the fire to get things done being that I bring them business.  So, find a good loan officer.  Call a friend, ask your agent, but don't just find a place online or walk into a bank and grab one.  It is really in your best interest to have someone who truly cares about your best interest working for you. 


Tuesday, March 11, 2014

What Is The #1 Thing An Agent Will Say To Get Your Listing? Watch Out, This Could Cost You

It happens way too often that when sellers are talking to agents and trying to figure out who to use, that their judgement becomes clouded by hopes of a over-inflated selling price of their home promised by an agent.  I have lost listings to agents that have promised super high selling prices to get the listing and just about every agent out there has been through the same thing.  But the market doesn't lie....and when homes that are similar to yours are selling at a certain price, don't be fooled that yours may be able to sell for a much higher amount.  As a seller, you should do your own home work and find out what the last 2-3 houses in your neighborhood sold for in the past 4 months.  Look at the photos online and compare the size of the home, the upgrades and amenities.  Now, let's say I tell you your home's true value is about $1 Million.  And you have another agent that comes in to meet with you and tells you your home is worth $1.3 million dollars (even though you've seen the sales nearby and they are closer to my estimate)  If you choose to list your home at $1.3 million there are a number of things that could cost you big time and here are just a few:
   First and foremost, you've chosen to work with an agent that isn't upfront with from the start and that is just a sign of where things may go as they move further along. And you have just signed a contract under this agent that is binding you to them for months.
   Next, if your house is prices too high, the initial boom of interest in a home that just hits the market, will sail right past yours.  Other brokers will know before even seeing your house that it is over priced and most won't even bother to come to the broker's open for that reason alone.  And as for buyers, you will probably get an open house or two where people stop by to see the home, but buyers will be looking for similarly priced homes in your area and quickly see that yours does not compare.  The lack of interest will either keep your home on the market at this high price for a long period of time, or the agent that you signed with will then convince you to drastically lower the price to attract offers.  Either of these are not in your best interest.  See, when a home first hits the market, if it is priced and marketed well, it should attract a good amount of attention.  This is the best time for your agent to do their job and try to get a flurry of buyer's and buyer's agents interested enough to make offers...and hopefully you will get a great one quickly, if not more than one.  If you pass this initial excitement phase, you may be expecting low offers, even after you lower your price because sellers will see how long your home has been there and they will come in low, knowing they are probably the only interested party actually writing an offer.
Lastly, unless someone is willing to pay all cash for your home, your home can only be sold at a certain price that an appraiser working for the buyer's loan officer says it is worth.  It is not uncommon that a buyer will put an offer on a house of $1.1 million knowing full well that the house will appraise closer to $1 million.  And when that appraisal comes in, the buyer will have kept your home off the market for a couple weeks at that point, then ask you to lower the price so that they can get the loan to buy it.  Some sellers won't do this and put their home back on the market, which then makes the next buyers ask what happened with the first buyer.  Or, the sellers feel that is their best option to lower the price and get the home sold...which to a seller can feel like a defeat after being promised by their agent they would be able to sell it for a much higher price.

So, when thinking about listing your home, ask it worth it to gamble with an agent who sounds to good to be true, or are you serious about selling your home and doing it well with the right agent?


Monday, March 3, 2014

When Dealing With Multiple Offers, Is The Other Agent Being Honest?

If you have been in a multiple offer situation before, I'm sure you have asked whether the other agent is being honest with you and your agent.  Maybe you've heard things such as "You need to be at "this" price to get the home" or "You will have to put shorter contingencies in your offer".  Things like this, and other things, can be suggested by the listing agent in order to get your offer accepted.  So, is that agent being truthful or are they yanking your chain to get a really high offer?  Well, let's sit in the listing agents' shoes for a minute.  Chances are, yes, they have another offer, if not a few.  Let's say they have 3 offers and the offers are like this:
Bob offered $500k
Sally offered $515K
John offered $499K
Then your offer comes in at $510K
Since your offer is in an acceptable price (and lets say all other things on the offer are similar or the same) they will take your offer into consideration.  Now, while looking at this from the listing agent's POV, in order to get the best price for the client, they could call you and Bob and say that $520K is the price that will get the offer accepted, which would be higher than Sally's offer. Saying this to you and Bob gives you guys the chance to raise your offers and get the house.  If neither of you choose to do this, they will most likely accept Sally's offers since this is still the highest.  But I know what you are is possible that they have 2 offers and it goes like this:
Bob offered $500K
You offered $510K
And are you thinking that the listing agent calls and tells us that they have multiple offers and in order to get our offer accepted, you must come up to an offer of $520K (which would be pitting your against yourself)?  Chances are they are not doing this...and here is why:  If I were the listing agent, my job is to get the best and highest offer accepted to my client.  Having 2 (or even 3) good offers on the table is better than one, just in case something happens to my first chosen offer, I can have another as back-up.  If I were to tell the highest offer that they need to come up in price (which is playing a game of sorts), there is a chance the highest offer could walk away all together.  Then, not only have I lost my client's highest offer, but now we only have one offer to work with and if something goes wrong with this one offer, we will have to put the house back on the market, taking up more time and money from everyone involved. So, it would not be wise for an agent to gamble like this and in my opinion, I would not think this to be something a good agent would do.  So, if you ever find yourself in multiple offers wondering if someone is yanking your chain, try to think about what the other agent maybe be thinking and what risks would be involved if they were not being honest...chances are, they are just trying to get the best deal for their client and what you are hearing, is the truth.


Sunday, March 2, 2014