Cash Buyers and Short Sales
Recently, an investor that wants to make offers on short sales contacted me. He has been working with some local agents and is frustrated because the short sales are taking eight to twelve weeks to get approved. Also, in some cases, his offers have not been accepted. He expressed dismay that his cash offers (sometimes above list price) were not even being submitted to the short sale lender. Because he was paying cash as opposed to obtaining a mortgage, he felt that the lenders should move more quickly.
Now and again, I speak with an investor buyer that feels that “cash is king.” And, short sale sellers should recognize that there are many advantages to accepting a cash offer on their property. However, when writing a cash offer on a short sale, the buyer needs to understand that there are a number of reasons why cash may not always be king.
Benefits of Cash Offers on Short Sales
In a short sale transaction, there are some significant benefits to cash offers. For one, the cash buyer does not have to obtain a mortgage loan. This very fact can speed up the closing of the transaction. Additionally, a cash buyer may have a little bit of wiggle room when and if the bank does not approve funds for certain items required for the short sale closing. For example, if there is overdue HOA or a required termite report, the cash buyer might be able to contribute some funds to cover those fees. Lastly, in a pinch and if the foreclosure auction is imminent, the cash buyer can close more quickly. That last fact is often seen as a positive by the short sale negotiators and processors at the bank.
Disadvantages of Cash Offers on Short Sales
Often times cash buyers (by the very nature that they are cash buyers) are more fluid. Since these buyers do not require a loan, they can continue to look at properties and shop around. Additionally, many cash buyers are investors that are looking for an investment with a strong return. So, if the bank counters their offer at a higher price, they might move on to another investment. Lastly, as an investor buyer, the cash buyer is not emotionally attached to the property in the way a first time homebuyer might be. For example, a first time homebuyer might want a specific school district or neighborhood, whereas the investor is often more focused on the financial bottom line.
Are short sale processing times faster for cash offers?
With respect to short sale negotiations, few and far between are the times when bank employees will speed up their corporate time frames (or consider cash as king) and take a lesser dollar amount because a cash buyer has submitted an offer. If an investor, such as Fannie Mae or Freddie Mac, has done their due diligence and decided upon a minimum net amount, the very fact that the offer is cash will not usually coerce the lender into accepting something less than a pre-determined net. Additionally, it is not often that a bank will speed things up when a cash offer is on the table.
I’ve gotten a few short sales with cash offers approved in record time—several in under a week. However, in all of those cases, I already had a fully-approved package in the hands of a higher-level short sale executive who was just waiting for me to submit either a new offer or an offer that already met some pre-determined or pre-approved terms. So, in those cases, it might not have been the cash that was king. I could also chalk it up to dumb luck or my excellent short sale processing skills.
There’s a lot for short sale sellers to consider when looking at offers. And, sellers may find that depending upon their needs, cash may not always be king.
Austin tops the list of best places to buy a home
When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?
Looking at the bigger picture
(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).
That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).
They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.
“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”
Average age of houses on the rise, so is it now better or worse to buy new?
With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.
The average home age is higher than ever
(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.
With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.
Prices of new homes on the rise
Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.
Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?
The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.
Why Realtors are vulnerable to these rapid changes
(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.
Note: We’ll let you decide which company plays which role in the image above.
So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.
1. Zillow poaches top talent, Move/NAR sues
It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.
Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.
2. Two major media brands emerge
Will cash still be king after COVID-19?
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Ladies and gentlemen, the U.S. National Anthem
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