I like to say ‘better money sooner’, but that’s just a recapitulation of the core idea of my listing praxis: Highest, safest, soonest. We’re looking for the highest attainable return in a reasonable span of time.
‘Attainable’ means two things: We want the highest price a real buyer is willing to pay, rather than what we might wish we could get, instead. And we want for that buyer to actually be able to pay that promised sum on time – ideally without the seller’s help.
So an FHA offer at 105% of list, with 3% coming back to the buyer in seller-paid concessions, is sub-optimal, even though the top-line number is bigger. The house still has to appraise – and it won’t, not above market value – and you already know your buyers have no cash to spare to make up the difference. Not only won’t you be getting the bigger number, there’s a good chance the buyer will be unable to perform at COE – putting you back on the market, wiser but shop-worn.
On the other hand, all cash at 98% of list can be worth considering. ‘Cash is King’, so it expects a discount. That lousy FHA offer can be useful to get the buyer to 100% or above, but with no or few contingencies and a quick closing, cash is typically better money: Not higher, necessarily, but much safer and much sooner.
The hierarchy of real estate funding looks like this:
• Cash
• Conventional
• FHA/VA, etc.
• Other
Cash is King – very safe, very soon – but a strong conventional borrower who is desperate to possess the house is likely to be both higher and safer (less likely to cancel) than a cash buyer.
VA borrowers can be very strong, financially, but VA loans can take a while to close and they require the seller to pay a significant portion of the buyer’s transaction costs. FHA borrowers are very often weak on credit, cash-on-hand and cash reserves. The offer that seeks a seller concession on the way in may need even more seller-paid funding to make it to the finish line. VA is less soon, FHA less safe.
As for the ‘other’ category – seller carrybacks, hard-money loans, etc. – if we are even talking about them for a Sun City home, something has gone terribly wrong with the property’s marketing.
How do I know that’s so? Because if a house is listed properly – priced to market and promoted irresistibly – it should attract cash and strong conventional offers immediately. It it doesn’t, the price is wrong. If the offers that come in eventually are all crazy government loans – over list but with countervailing concessions – the buyers want the seller to cover their shortfalls. And if the seller waits for months and then finally gets an offer with ‘creative’ financing…
Art elicits a response. A brand new real estate listing succeeds when that home’s eventual buyer says, “Hot dang! Must lock down immediately, before anyone else gets it.” The safest buyer, by far, is the one who wants it more. But if the listing doesn’t surface that buyer, plus others less frenzied – right away, in the first few Days on Market – then it has failed.
But, listed right, your house should attract one or more cash or strong conventional offers at or near full price. Play your cards right, and you could Close above list in ten days – so get packin’! And that is better money sooner.
Discover more from Bloodhound Realty 602•740•7531
Subscribe to get the latest posts sent to your email.
