Q: I’m trying to buy a house and have made offers on foreclosures and on regular homes. I’ve had about eight different offers rejected. Almost every time, the sellers said they took an all-cash offer. But after they closed, a bunch of them actually sold for less than my offer! I don’t understand this — after closing, isn’t the money the seller gets from my bank’s mortgage just as good as the cash they get from a cash buyer’s money? If so, why wouldn’t they want more (meaning, my offer)?
A: Money is money, so you’re correct — more is better. But that’s an overly simplistic view of something that has gotten much more complicated than ever recently: a seller’s decision as to which offer to take. There are some very significant differences between "your money" (i.e., a mortgage-financed offer) and a cash offer.
Sellers would LOVE to take your money. But that assumes that they would, in fact, actually get your money. And that’s not an assumption many sellers are willing to make, if they have another attractive option.
The reality is that your mortgage lender interjects a whole laundry list of guidelines that you and the property must meet in order for the seller to get your money. From the seller’s perspective, every one of these guidelines has the potential to become an obstacle that stops the seller from getting your money. This list of guidelines or obstacles, as the case may be, takes an average of 30-40 days to get ticked all the way off. Only then can the seller collect — you guessed it — your money.
For the seller to collect your money, you and your spouse must have:
- acceptable credit scores (and maintain them throughout the transaction),
- acceptable employment and sufficient income (and maintain them throughout the transaction),
- sufficient assets in reserve,
- sufficient cash to close, from sources acceptable to the lender,
- acceptable other outstanding debts and monthly obligations. …CONTINUED