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The problem appears when you try to buy a home from a seller entertaining 10 other offers, most of which are cash offers for 10-20% over listing price with esca

The problem appears when you try to buy a home from a seller entertaining 10 other offers, most of which are cash offers for 10-20% over listing price with escalation clauses. It can be really hard to buy a home, especially in markets like Seattle, because the seller chooses which offer to accept and, all else being equal, will accept the offer with the fewest conditions (no financing required, inspection waived, etc).

the_gastropod 4y ago
Yep. This. I'm living in a much lower COL area, but it's still crazy. I've been hunting for a house for the past ~6 months. And have been outbid in every offer by someone else waiving inspection, waiving appraisal, and/or paying all-cash. It's wild how many people are apparently able to / willing to behave that way.
lolinder 4y ago
Yes, this can be a real problem. The mortgage company that we chose had a program where they did all of the underwriting before we even started making offers, and part of our offer was a certificate entitling the seller to $5000 at the mortgage company's expense if we couldn't get financing. Kind of like extra earnest money from the mortgage company offered as a guarantee that there wouldn't be any problems in closing. We ended up getting the first house we made an offer on in spite of an insane market, so I guess it worked!
- hd95489 4y ago
  Luck or you just offered enough more that the seller bit. 5k is nothing on a 1m deal.
  - lolinder 4y ago
    It's not the money that's the point, it's that the mortgage company is putting skin in the game. The value of a cash offer, aside from going above the appraisal value, is that there is no risk of it falling through due to financing problems. The $5k is nothing except that it shows that our offer may as well have been cash as far as that concern goes.
hd95489 4y ago
That was 6 months ago offer asking now and you will get it

the_gastropod 4y ago

Yep. This. I'm living in a much lower COL area, but it's still crazy. I've been hunting for a house for the past ~6 months. And have been outbid in every offer by someone else waiving inspection, waiving appraisal, and/or paying all-cash. It's wild how many people are apparently able to / willing to behave that way.

lolinder 4y ago

Yes, this can be a real problem. The mortgage company that we chose had a program where they did all of the underwriting before we even started making offers, and part of our offer was a certificate entitling the seller to $5000 at the mortgage company's expense if we couldn't get financing. Kind of like extra earnest money from the mortgage company offered as a guarantee that there wouldn't be any problems in closing. We ended up getting the first house we made an offer on in spite of an insane market, so I guess it worked!

hd95489 4y ago
Luck or you just offered enough more that the seller bit. 5k is nothing on a 1m deal.
- lolinder 4y ago
  It's not the money that's the point, it's that the mortgage company is putting skin in the game. The value of a cash offer, aside from going above the appraisal value, is that there is no risk of it falling through due to financing problems. The $5k is nothing except that it shows that our offer may as well have been cash as far as that concern goes.

hd95489 4y ago

That was 6 months ago offer asking now and you will get it