5 ms·

> 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
One reason I can think of is because the bank does an appraisal and may reject the loan if the appraised price is too low. They don't want to be stuck with a house worth less than the loan. I had this happen several years ago with a house I bid on (I was also pre approved and all that stuff).
keehun 5y ago
Sometimes (or often?) mortgages and financing can fall apart at the last minute, so sellers often prefer all-cash offers because they know there's virtually nothing that can make the deal fall through or drag on long. Pre-approval is usually done by different people than much stricter people who do the underwriting, so things can fall appart there, too. When I bought my last house (newly built), on the DAY OF closing, 2 hours before the closing appointment, my mortgage officer calls me to tell me I'd need to bring another $5000-ish (due to a reason I've blocked from my mind). He told me my builder would bring a check for an equivalent amount made out to me, but to make the accounting/financial all legal, we couldn't just "zero each other out". The money had to clear from both accounts. (I wish I could remember exactly the circumstances). And, this money couldn't just be a check but had to be a cashier's check that was guaranteed. It couldn't be cash, either, because it had to be from an account that the underwriters had reviewed and done money laundering screening for. Due to the logistics of that day, I had to go through herculean efforts to get that cashier's check made. I usually bank with online-only banks, and thank god that I had a local bank with just enough balance to make it all work... And that's for someone who is lucky enough to be able to bring that extra money and to be able to take the day off of work to make happen. I imagine many others wouldn't be as lucky. That closing could've been easily pushed off a couple days had this surprise made us unable to close that day. Sellers like not dealing with this, so they prefer cash offers.
- deleted 5y ago
  [deleted]
anonAndOn 5y ago
No loan underwriter to delay or veto the offer. Underwriters can put a hold on financing until X,Y & Z are fixed. Cash can take the house as-is.
tempnow987 5y ago
Because with cash you have the money to actually make the deal happen. With a mortgage you depend on a bank giving you the money. A bank says they will lend 75% LTV, you are preapproved for a $2M house, so will bring $500K to the table and bank will provide $1.5M you think. But wait, the appraisal comes back for $1.6M instead of the $2M you bid. Bank says no problem, we will lend 75% LTV or $1.2M. Now you have to find (within days) $300K. And you can't borrow it because that will mess up underwriting on your current loan. Or you buy a car before closing. Whamo - your DTI is toast. Or you have someone open a CC in your name. Whamo - no closing.
- harambae 5y ago
  >Or you buy a car before closing. Whamo - your DTI is toast. Anyone who needs to finance a car really shouldn't be buying a house, but I guess this is where America is
garren 5y ago
Cash closes quicker, ~2wks. Cash also gets rid of the need for an appraisal by the lender, also gets rid of any potential appraisal gap.
pandaman 5y ago
Time to close a loan is couple of weeks at the very least (could be 4 or more). The cash offer closes in days. Sellers prefer the latter: bis dat, qui cito dat.

deleted 5y ago

[deleted]

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

One reason I can think of is because the bank does an appraisal and may reject the loan if the appraised price is too low. They don't want to be stuck with a house worth less than the loan. I had this happen several years ago with a house I bid on (I was also pre approved and all that stuff).

keehun 5y ago

Sometimes (or often?) mortgages and financing can fall apart at the last minute, so sellers often prefer all-cash offers because they know there's virtually nothing that can make the deal fall through or drag on long. Pre-approval is usually done by different people than much stricter people who do the underwriting, so things can fall appart there, too. When I bought my last house (newly built), on the DAY OF closing, 2 hours before the closing appointment, my mortgage officer calls me to tell me I'd need to bring another $5000-ish (due to a reason I've blocked from my mind). He told me my builder would bring a check for an equivalent amount made out to me, but to make the accounting/financial all legal, we couldn't just "zero each other out". The money had to clear from both accounts. (I wish I could remember exactly the circumstances). And, this money couldn't just be a check but had to be a cashier's check that was guaranteed. It couldn't be cash, either, because it had to be from an account that the underwriters had reviewed and done money laundering screening for. Due to the logistics of that day, I had to go through herculean efforts to get that cashier's check made. I usually bank with online-only banks, and thank god that I had a local bank with just enough balance to make it all work... And that's for someone who is lucky enough to be able to bring that extra money and to be able to take the day off of work to make happen. I imagine many others wouldn't be as lucky. That closing could've been easily pushed off a couple days had this surprise made us unable to close that day. Sellers like not dealing with this, so they prefer cash offers.

deleted 5y ago
[deleted]

anonAndOn 5y ago

No loan underwriter to delay or veto the offer. Underwriters can put a hold on financing until X,Y & Z are fixed. Cash can take the house as-is.

tempnow987 5y ago

Because with cash you have the money to actually make the deal happen. With a mortgage you depend on a bank giving you the money. A bank says they will lend 75% LTV, you are preapproved for a $2M house, so will bring $500K to the table and bank will provide $1.5M you think. But wait, the appraisal comes back for $1.6M instead of the $2M you bid. Bank says no problem, we will lend 75% LTV or $1.2M. Now you have to find (within days) $300K. And you can't borrow it because that will mess up underwriting on your current loan. Or you buy a car before closing. Whamo - your DTI is toast. Or you have someone open a CC in your name. Whamo - no closing.

harambae 5y ago
>Or you buy a car before closing. Whamo - your DTI is toast. Anyone who needs to finance a car really shouldn't be buying a house, but I guess this is where America is

garren 5y ago

Cash closes quicker, ~2wks. Cash also gets rid of the need for an appraisal by the lender, also gets rid of any potential appraisal gap.

pandaman 5y ago

Time to close a loan is couple of weeks at the very least (could be 4 or more). The cash offer closes in days. Sellers prefer the latter: bis dat, qui cito dat.