6 ms·

We're in the housing hunt right now and we're losing to all-cash offers and ridiculous terms (like months of rent-free to the previous occupany: those sort of t

We're in the housing hunt right now and we're losing to all-cash offers and ridiculous terms (like months of rent-free to the previous occupany: those sort of terms don't come from someone looking for a new place to live). We even lost on two offers where we were the high bid. We have pre-approval, solid financing and were willing to even waive the appraisal. It's not enough.

frankbreetz 5y ago
What kind of mortgage allows you to waive the appraisal? Seems a little negligent for the bank. How can they finance something if they don't know how much it is worth?
- ska 5y ago
  Short answer is they let you take the risk on it, not them.
- classichasclass 5y ago
  No, you waive the appraisal contingency; the bank still does their own appraisal. If the property appraises low, you pay the difference. In this market, we kept some reserve for that eventuality to make the application competitive. The sellers want a buying frenzy and that's what's happening, so many properties don't appraise since those values are usually calculated on historical sales.
- alex504 5y ago
  The bank will only cover what it is appraised at. You have to split the difference with cash. Some banks might be willing to give you different terms (higher apr, more down) but that is generally how it works in my experience.
ddavis 5y ago
Also on the housing hunt and have had the same experience. It's really disheartening to tell someone I'm going to give you exactly what you are asking for and have that transaction, that seems so easy without any kind of counter-offer back and forth, fall apart... multiple times. An article like this definitely brings out a little anger.
- classichasclass 5y ago
  You said it. One of the most galling things was sellers' agents that don't even let your agent know that you didn't get the bid (let alone ask for counteroffers). We only found out we lost out a couple times when it went pending on the MLS; we never heard a word. We're just interchangeable piggy banks to these people, apparently.
  - foobarian 5y ago
    Been house hunting as well. You know what I've seen more than ever? Seller's agents behaving as jerks. Things we experienced going to open houses: - Agent sizes us up (I dress down on purpose), says something to the effect of "You know this house will probably sell for even more than (already high) asking". - Agent just sits around playing with her phone. No shits given. - Agent sizes us up, realizes we're just window shopping/taking our time, "mansplains" to us "you know how this works, right? 24 hours from now there will be multiple offers and it will be gone" The other unfortunate thing right now is that loan rates are (finally) spiking. Like > 4% for 30 year fixed. I wish we bought before the winter... And even worse if this keeps up the housing prices will crash just when we bought high. Oh well.
    - Auracle 5y ago
      Realtors are nothing but leeches nowadays and it’s a profession that needs to die or greatly change.
  - j2bax 5y ago
    I hate to say it but when you are on the selling side and you are getting all sorts of offers, you just go for the most money and the easiest closing (in most cases). Then it's your turn to enjoy the buyers side of the sellers market... Unless you've decided to just rent for the foreseeable future with your newly attained cash horde.
jsnodlin 5y ago
rdiddly 5y ago
Yeah we dodged a bullet on ours. The only reason we got it was because a previous cash offer fell through at the last minute.
gregwebs 5y ago
pre-approval doesn't amount to much. One thing you can do to compete with cash is to get a fully underwritten mortgage (you need to find a lender that does this). For a fully underwritten mortgage, the lender will give a $10,000 guarantee that the mortgage will close: this makes the offer more similar to a cash offer.
- classichasclass 5y ago
  Honestly, do you really think that was our whole problem?
- tempnow987 5y ago
  These still have lots of stars. They will close IF property appraises at value you bid. Heads up, in a multiple offer scenario it very likely WILL NOT.
lkbm 5y ago
I dunno, I'm looking for a place to live, but ideally starting in July, so if I can get a better deal by offering the current owner/tenants free rent until then, that'd be perfect. If you're starting a job in a new town in March, it's not a great option, but if you're looking months ahead of your preferred move date, why not?
- BeetleB 5y ago
  Because you are now paying double "rent".
  - lkbm 5y ago
    Sure, but a month's rent is something like 0.5% of the cost of a house. If they simply offered 1.5% more for the house to get the one they wanted would anyone say "No person actually looking for a place to live would do that"? $10k on the base offer or $10k in "free rent" is $10k either way.
    - BeetleB 5y ago
      The difference is that if they increased the price by $10K, you can get the loan to pay them, and you amortize that payment over 30 years. Many people are financially stressed enough to pay the downpayment - essentially you are saying the downpayment should go up by $10K. They may not have that $10K.
      - lkbm 5y ago
        Yes, this is a very material difference to a lot of people, but the original claim was that it's something that only a speculator would do. I'm saying that as a person looking to buy and move into a house, this is 100% something I'd be happy to do. Where I am, I'm seriously considering down payments in the hundreds of thousands. Should houses be that expensive? No, I personally believe we should build so much housing that it tanks the market. But the reality for people trying to buy a house here (Austin TX), +$10k to the down payment is insignificant compared to the price variation between home A and home B.
graaben 5y ago
Do you expect things to get better in the future? I'm not in the market to buy right now, but I'm trying to understand if the current situation is the new normal or still a reaction to covid upheavals. My gut tells me that in 2-3 years things will be much closer to normal as rates rise and people that fled to suburbs decide to move back to the city.
- notch656a 5y ago
  Is it normal for people who move to the burbs to go back to the city?
  - graaben 5y ago
    My assumption is that a large percentage of the people who fled NYC/SF in March 2020 are either 1) going to miss the city once it fully reopens and they remember why they lived there in the first place; or 2) their "remote forever" job is actually going to become hybrid and they won't want the 2 hour commute.
  - yardie 5y ago
    Probably not. The majority of the tenants in my building are young professionals and empty nesters. Families with children come through but are gone after a year. Once you're on that track it's very hard to go back to city living. Space is at a premium and kids need space for 18 years. I assume the suburbs are made of people that love suburb living (so much space!) and people with children. Outside of finance and government there isn't a large sector in most cities. Most businesses are in cheaper, suburban office parks. So beyond the social and cultural aspects there aren't that many advantages to city living, IMO.
  - pbuzbee 5y ago
    I'm sure some people will return to cities, but I feel that many will remain in the suburbs. To me, one of the pieces of this surge in prices is due to millenials reaching prime homebuying age. But millenials are also at prime ages for starting and raising families, so I suspect many will prefer to keep the larger size of their suburban homes.
- 5y ago
chrisseaton 5y ago
> we're losing to all-cash offers Why do the sellers care if you're buying with cash or a mortgage?
- deleted 5y ago
  [deleted]
- matsemann 5y ago
  I wonder the same. If I have a loan, they still get cash from my bank. I don't know much about the US house buying process, but from what I've read about it it sounds insane. Fees everywhere, two realtors involved etc.
  - pkaye 5y ago
    You don't need a realtor to buy/sell a house.
- cloverich 5y ago
  less risk when house doesn’t appraise because buyer can cover the difference. might be others but that’s what i inferred last time we lost out.
- classichasclass 5y ago
  Presumably because there's no delay for financing or the possibility of having to exercise a loan contigency if it falls through.
- count 5y ago
  It de-risks and accelerates the transaction. Most mortgage based purchasing requires the loan lender to approve the house for the value (even if you are 'pre-approved' for a loan of $X, if the bank doesn't think the house is worth $X it won't let you take the loan out for it). All cash offers don't have those approvals or risks, however slight, and also have no/less time delay - you can close in a week (just a title/deed history search, generally).
- xerxesaa 5y ago
kyleblarson 5y ago
No bank is going to give you a mortgage without an appraisal. Do you mean waive the inspection?
pbuzbee 5y ago
I'm in this boat too. It feels like a line was drawn sometime in 2020 or 2021: either you bought before then, and now you can enjoy your appreciation and relatively low mortgage, OR you're currently desperately trying to grab onto the last rung of the ladder as it gets lifted above you.
garren 5y ago
Regarding all cash offers, have you looked at all cash options that are available through lenders like accept, inc [0] or better.com [1]? I’m in the market for a place now and recently lost to an all cash bidder. Turns out they were using [0]. I was already pre-approved through a conventional lender, but all-cash seems to be the new norm. [0] http://www.accept.inc/ http://www.accept.inc/ [1] https://better.com/content/better-cash-offer-faq https://better.com/content/better-cash-offer-faq
bepzi 5y ago
I went though exactly that, and it's disheartening, indeed. I was fortunate enough to finally get my financed offer accepted, but only because the sellers were explicitly rejecting cash offers from investors. It was a family home, and they wanted it to go to someone who would maintain and live in it. Keep looking, keep trying, and maybe you'll get lucky too.

frankbreetz 5y ago

What kind of mortgage allows you to waive the appraisal? Seems a little negligent for the bank. How can they finance something if they don't know how much it is worth?

ska 5y ago
Short answer is they let you take the risk on it, not them.
classichasclass 5y ago
No, you waive the appraisal contingency; the bank still does their own appraisal. If the property appraises low, you pay the difference. In this market, we kept some reserve for that eventuality to make the application competitive. The sellers want a buying frenzy and that's what's happening, so many properties don't appraise since those values are usually calculated on historical sales.
alex504 5y ago
The bank will only cover what it is appraised at. You have to split the difference with cash. Some banks might be willing to give you different terms (higher apr, more down) but that is generally how it works in my experience.

ddavis 5y ago

Also on the housing hunt and have had the same experience. It's really disheartening to tell someone I'm going to give you exactly what you are asking for and have that transaction, that seems so easy without any kind of counter-offer back and forth, fall apart... multiple times. An article like this definitely brings out a little anger.

classichasclass 5y ago
You said it. One of the most galling things was sellers' agents that don't even let your agent know that you didn't get the bid (let alone ask for counteroffers). We only found out we lost out a couple times when it went pending on the MLS; we never heard a word. We're just interchangeable piggy banks to these people, apparently.
- foobarian 5y ago
  Been house hunting as well. You know what I've seen more than ever? Seller's agents behaving as jerks. Things we experienced going to open houses: - Agent sizes us up (I dress down on purpose), says something to the effect of "You know this house will probably sell for even more than (already high) asking". - Agent just sits around playing with her phone. No shits given. - Agent sizes us up, realizes we're just window shopping/taking our time, "mansplains" to us "you know how this works, right? 24 hours from now there will be multiple offers and it will be gone" The other unfortunate thing right now is that loan rates are (finally) spiking. Like > 4% for 30 year fixed. I wish we bought before the winter... And even worse if this keeps up the housing prices will crash just when we bought high. Oh well.
  - Auracle 5y ago
    Realtors are nothing but leeches nowadays and it’s a profession that needs to die or greatly change.
- j2bax 5y ago
  I hate to say it but when you are on the selling side and you are getting all sorts of offers, you just go for the most money and the easiest closing (in most cases). Then it's your turn to enjoy the buyers side of the sellers market... Unless you've decided to just rent for the foreseeable future with your newly attained cash horde.

jsnodlin 5y ago

rdiddly 5y ago

Yeah we dodged a bullet on ours. The only reason we got it was because a previous cash offer fell through at the last minute.

gregwebs 5y ago

pre-approval doesn't amount to much. One thing you can do to compete with cash is to get a fully underwritten mortgage (you need to find a lender that does this). For a fully underwritten mortgage, the lender will give a $10,000 guarantee that the mortgage will close: this makes the offer more similar to a cash offer.

classichasclass 5y ago
Honestly, do you really think that was our whole problem?
tempnow987 5y ago
These still have lots of stars. They will close IF property appraises at value you bid. Heads up, in a multiple offer scenario it very likely WILL NOT.

lkbm 5y ago

I dunno, I'm looking for a place to live, but ideally starting in July, so if I can get a better deal by offering the current owner/tenants free rent until then, that'd be perfect. If you're starting a job in a new town in March, it's not a great option, but if you're looking months ahead of your preferred move date, why not?

BeetleB 5y ago
Because you are now paying double "rent".
- lkbm 5y ago
  Sure, but a month's rent is something like 0.5% of the cost of a house. If they simply offered 1.5% more for the house to get the one they wanted would anyone say "No person actually looking for a place to live would do that"? $10k on the base offer or $10k in "free rent" is $10k either way.
  - BeetleB 5y ago
    The difference is that if they increased the price by $10K, you can get the loan to pay them, and you amortize that payment over 30 years. Many people are financially stressed enough to pay the downpayment - essentially you are saying the downpayment should go up by $10K. They may not have that $10K.
    - lkbm 5y ago
      Yes, this is a very material difference to a lot of people, but the original claim was that it's something that only a speculator would do. I'm saying that as a person looking to buy and move into a house, this is 100% something I'd be happy to do. Where I am, I'm seriously considering down payments in the hundreds of thousands. Should houses be that expensive? No, I personally believe we should build so much housing that it tanks the market. But the reality for people trying to buy a house here (Austin TX), +$10k to the down payment is insignificant compared to the price variation between home A and home B.

graaben 5y ago

Do you expect things to get better in the future? I'm not in the market to buy right now, but I'm trying to understand if the current situation is the new normal or still a reaction to covid upheavals. My gut tells me that in 2-3 years things will be much closer to normal as rates rise and people that fled to suburbs decide to move back to the city.

notch656a 5y ago
Is it normal for people who move to the burbs to go back to the city?
- graaben 5y ago
  My assumption is that a large percentage of the people who fled NYC/SF in March 2020 are either 1) going to miss the city once it fully reopens and they remember why they lived there in the first place; or 2) their "remote forever" job is actually going to become hybrid and they won't want the 2 hour commute.
- yardie 5y ago
  Probably not. The majority of the tenants in my building are young professionals and empty nesters. Families with children come through but are gone after a year. Once you're on that track it's very hard to go back to city living. Space is at a premium and kids need space for 18 years. I assume the suburbs are made of people that love suburb living (so much space!) and people with children. Outside of finance and government there isn't a large sector in most cities. Most businesses are in cheaper, suburban office parks. So beyond the social and cultural aspects there aren't that many advantages to city living, IMO.
- pbuzbee 5y ago
  I'm sure some people will return to cities, but I feel that many will remain in the suburbs. To me, one of the pieces of this surge in prices is due to millenials reaching prime homebuying age. But millenials are also at prime ages for starting and raising families, so I suspect many will prefer to keep the larger size of their suburban homes.
5y ago

chrisseaton 5y ago

> we're losing to all-cash offers Why do the sellers care if you're buying with cash or a mortgage?

deleted 5y ago
[deleted]
matsemann 5y ago
I wonder the same. If I have a loan, they still get cash from my bank. I don't know much about the US house buying process, but from what I've read about it it sounds insane. Fees everywhere, two realtors involved etc.
- pkaye 5y ago
  You don't need a realtor to buy/sell a house.
cloverich 5y ago
less risk when house doesn’t appraise because buyer can cover the difference. might be others but that’s what i inferred last time we lost out.
classichasclass 5y ago
Presumably because there's no delay for financing or the possibility of having to exercise a loan contigency if it falls through.
count 5y ago
It de-risks and accelerates the transaction. Most mortgage based purchasing requires the loan lender to approve the house for the value (even if you are 'pre-approved' for a loan of $X, if the bank doesn't think the house is worth $X it won't let you take the loan out for it). All cash offers don't have those approvals or risks, however slight, and also have no/less time delay - you can close in a week (just a title/deed history search, generally).
xerxesaa 5y ago

kyleblarson 5y ago

No bank is going to give you a mortgage without an appraisal. Do you mean waive the inspection?

pbuzbee 5y ago

I'm in this boat too. It feels like a line was drawn sometime in 2020 or 2021: either you bought before then, and now you can enjoy your appreciation and relatively low mortgage, OR you're currently desperately trying to grab onto the last rung of the ladder as it gets lifted above you.

garren 5y ago

Regarding all cash offers, have you looked at all cash options that are available through lenders like accept, inc [0] or better.com [1]? I’m in the market for a place now and recently lost to an all cash bidder. Turns out they were using [0]. I was already pre-approved through a conventional lender, but all-cash seems to be the new norm. [0] http://www.accept.inc/ http://www.accept.inc/ [1] https://better.com/content/better-cash-offer-faq https://better.com/content/better-cash-offer-faq

bepzi 5y ago

I went though exactly that, and it's disheartening, indeed. I was fortunate enough to finally get my financed offer accepted, but only because the sellers were explicitly rejecting cash offers from investors. It was a family home, and they wanted it to go to someone who would maintain and live in it. Keep looking, keep trying, and maybe you'll get lucky too.