Why the short sale sellers accepted a cash offer.
Just this morning, my short sale sellers accepted an all cash offer fo their duet in Alameda, CA.
It wasn’t the highest offer (another cash offer was the highest among the dozen offers we received in less than a week from when we activated the listing).
The question was asked, why did the sellers choose this offer. Coincidentally, another post asked, In Multiple Offers Is Cash King?
Why did the sellers accept the cash offer?
Perhaps the market is heating up. Even Warren Buffet says It's time to buy real estate."
It could be that there are so very few homes to choose from, and a handful is considered in good condition. Besides location, price is the biggest draw. But it is NOT the only reason why people choose a cash offer.
Factoring in the price, terms and conditions, here’s what went in to the short sale sellers’ decision.
- Are offers higher than the list price -- no low ball offers are considered. Prices are already significantly lower than what sellers owe. The lower the offer, the less chance of getting the short sale approved
- Are these offers reasonable compared to market value? Short sale lenders prefer close to or at market value.
- What if they accept an offer from a buyer who needs to get a loan, and the short sale lender approves that price....but then appraisal comes in at less than the offer...
- Is the buyer willing to move forward with the purchase?
- And if so, is the buyer willing to come up with the difference between his loan and the purchase price?
- Are the buyers willing to open escrow upon acceptance by the sellers and BEFORE receipt of short sale approval?
- Are the buyers willing to wait longer than the 45 days that are standard in the short sale addendum?
- Are the buyers willing to stop looking at other properties, and agree to wait for the short sale approval on this property?
- Are the buyers willing to buy as is?
- That is, no repairs, no credits
- Buyers are responsible for compliance with any and all government regulations and local ordinances
- Will they agree to shorter contingency periods if any?
- Have the buyers read and signed off on all the disclosures so they know what to expect and as such, no surprises?
- Will they agree to work with the sellers’ title company who has already invested effort in preparing a preliminary report and who offers short sale negotiation service?
- Lastly, who are the people buying the property?
- Don’t discount the sellers’ emotional state of mind and attachment to the property, coupled with their concerns about their neighbors and the type of people who are going to move into their home.
- Some sellers may not care, but many do. They want to make sure the people buying the property will also meet certain standards. These are sellers who are not yet detached from their home.
Logic is not completely detached from emotion.
In my short sale sellers’ minds, they went with a couple paying cash, who wants to be close to their first grandchild, who accepted all the conditions the sellers asked for, who had no contingencies other than the final walk through.
And oh, it didn’t hurt that the buyers' offer was one of the highest.
So no, the sellers didn’t leave money on the table. And yes, they got an excellent offer, excellent terms, and high likelihood of getting approved by the short sale lender.