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| One of the houses I am interested in buying needs a lot of work. I'm not getting a mortgage so no problem with that. But the seller has put the pressure on and told me, of course I don't know if it's true or not, that after a year on the market, someone else is making an offer. She said it's some strong builder guy who has been approved for a "203K construction loan." We were going to offer less money than she says he offered. Do you think this guy is serious competition I have to worry about? If he's real, how easy will it be for him to get this loan? |
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| Nobody can answer these questions for you - all they could do is speculate. There may or may not be another offer - who knows? The other offer may or may not be able to get financing, who knows? Your only real option is to make a fair market offer on the place and let the chips fall where they may. If the seller is so out of touch that they don't understand the value of a cash offer, there isn't a lot you can do about that. |
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- Posted by LoveInTheHouse (My Page) on Wed, May 25, 11 at 22:20
| Okay thanks Billl. You're right--a cash offer is valuable no matter what kind of loan the other offer includes. It's still a loan and we're cash. |
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| "It's still a loan and we're cash." To the seller it makes relatively little difference. You can purchase without a financing contingency, the other guy likely cannot. You may be able to get to settlement faster, with less risk of the deal falling apart for financing. The seller walks away with cash, no matter what the buyer's source is. If you want the house make an offer, preferably with a 24 hours expiration (no sense in letting the seller shop the offer).
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| As someone who recently sold a house to a cash buyer and bought a house as a cash buyer I do think that in today's market being a cash buyer is a plus. We were told that on the house we bought that our offer was less than that of someone else and ours was accepted because we were cash buyers. It just takes a lot of uncertainty out of the mix as a seller. I think a prudent seller would normally prefer the cash buyer to avoid the financing contingency. That said -- it certainly may depend on how much difference there is between the two offers and how much the seller is willing to risk. |
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| "As someone who recently sold a house to a cash buyer and bought a house as a cash buyer I do think that in today's market being a cash buyer is a plus." Not having financing and appraisal contingencies is a plus in ANY market. S an investor I have purchased multiple properties with what appears as cash offers since I do not have the contingencies, despite actually having a mortgage. When you put 30% to40% down and have a good mortgage broker the risk of not getting a loan is rather small. I could actually cover the price if I wanted anyway.
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- Posted by barbcollins (My Page) on Thu, May 26, 11 at 20:31
| "She said it's some strong builder guy who has been approved for a "203K construction loan." Hmmm.. Is the "builder guy" planning on making this his primary residence. If he's not then somebody is fibbing. From the HUD website: No. In October, 1996, the Department placed a moratorium on investor participation in the 203(k) Rehabilitation Mortgage Program. |
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- Posted by LoveInTheHouse (My Page) on Thu, May 26, 11 at 22:53
| Oh Barb, I don't know if this builder guy is going to use it as his primary residence. I didn't think to ask. I guess there's nothing I can do anyway. I'm going to see it again and we'll see what happens. Thanks! |
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| 203k loans are not hard to get, they just take a little longer to close because there are a few more inspections and alot more paperwork. I have a buyer going thru one now and it looks like it will take about 2 weeks longer than a conventional closing. Just the fact that the owner said he is getting a 203k construction loan leads me to believe there is another interested party. (Most homeowners don't know different types of loans like that). A cash offer is always more appealing, but most sellers won't take a significantly lower offer just because its cash. In the end, the net is the same to the seller. |
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- Posted by LoveInTheHouse (My Page) on Fri, May 27, 11 at 22:53
| Thanks Linda. |
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- Posted by ncrealestateguy (My Page) on Sat, May 28, 11 at 8:04
| Love, I tell my buyers who find themselves in a multiple offer situation this... "There are several players in this game now. By this time tomorrow, there will be multiple losers and only one winner. If you truly want to wake up tomorrow being the winner, then make it happen. If it is not that big a deal to you either way, then keep your offer where it is. Do not try to second guess the other buyers. |
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- Posted by LoveInTheHouse (My Page) on Sun, May 29, 11 at 23:46
| Thanks ncrealestateguy. That's very good, sensible advice. |
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- Posted by Kevin the 203k loan guy(kwaltonucf@yahoo.com) onThu, Jun 2, 11 at 10:10
| 203k loans are not that difficult to obtain. But the "builder guy" has to buy the property as his owner occupied residence. He may be trying to do the work on his own as well which is allowed by some 203k lenders. They give him the funds to fix it, he does the fix its himself. |
Here is a link that might be useful: 203kloanrehab.com
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