Denis - excellent explanation - thanks!

Three questions to everyone:

1. While we have listed our home with an agent - one that I believe is pretty fair. But we are not obligated to only use her as our buying agent on our new home. Would it make sense to seek out the listing agent and go through them on the purchase of a new home? That way, that RE agent would get all the commission, and likely seek to persuade the owner to sell to us. Sounds unethical - but it would put us in a better position.

2. Agents that represent both the buyer and seller - seems unethical to me, or at a minimum, there is a conflict of interest. But we have come across that - on a piece of land we are interested in. But the listing agent would rather go with the other offer since she would get full commission then. How can we best deal with that scenario?

3. From a financial perspective, given the asking price of our home, and the type of home we are looking to move into, if we sell our home, we would be putting about 60% down, and financing the rest. I could possibly put down an additional $100k. But I would still need to finance a portion of the cost of the new house. Using this as a guideline, how could I make my offer more attractive?

Thanks for the input guys!
-Z

Z,
Sorry to hear about all the crap you are having to deal with. My wife is a realtor here in the silicon valley. She is an honest one too. You would not believe the slime balls on the other end of some of her transactions. (other RE agents)

She and her business partner built their business on referral only, not advertising or back stabbing to get to the top of their game.
A good realtor works a lot harder then you think. It is not as simple as you are putting it Sammy.
Before my wife became a realtor, I too looked at them like used car salesman. That was fifteen years ago. I am a changed man. I wish there were more out there like my wife.

I'm not worried about who the agent represents- They earn a commission only if the deal closes. Bottom line, they are not truly representing buyer or seller- They are just doing whatever they can to get both parties to agree to terms, and get the sale completed.

Maybe this is God's way of warning you to not move to New Jersey! Ew. (Yes, I have lived in N.J. You'll love all the restrictions!)

RE agents do a lot of insider buying and selling. They have to disclose the selling part but IIRC, they don't have to disclose if they are trying to buy the property. Make sure you have a seller ONLY agreement with your RE agent.

I refuse to be in a bidding war. I walked away from more than one house when the seller tries to pull that stunt. When we were negotiating the current house we own, the seller started to pull that crap and I told my agent to call them and tell them I was offended and that my current cash offer just became my final offer and comes off the table in 24 hours so take it now or pound sand. They took my offer. I agree that old fashioned principles are very strong. Money talks.

Por-sha - I've lived in NJ My entire life - so I must be a sucker for punishment - but at least I know what I'm in for!
-Z

Not that there's anything wrong with that...
I used to love spending an hour idling in line waiting to have my car inspected so that they could tell me if my car needed a tune up and was using too much gas. Back then, the GSP had toll booths every few miles and we wondered why gas mileage was low and traffic was so bad. Is self-serve gas still not allowed?

Bingo.

RE agents get paid to close deals, but are often duty bound to provide good advice along the way. Nearly all agents are willing and (maybe even able) to provide good advice, up until it gets in the way of getting paid. Not all agents are morally incorruptible. But in ANY business transaction in ANY industry, you should always give careful consideration to the incentives provided to somebody that is providing you with advice.

In this specific situation, I'd say go for it, just don't ask the agent if you are paying a good price and expect to get an honest answer!

RE: the "cash is king" comments....I never got this....once your bank forwards your payment to my bank its freaking cash.....non issue and should have no bearing during an ethical transaction. We had some nasty dealings as well Z-Man....We sold our house on the basis of our new possession date just to find out some bad things about the surrounding development that wasn't disclosed. (Think well water made illegal and every one must pony up the $25K to be connected to municipal water, The pig barn approval 2 miles upwind and the upcoming road and curb improvement levee of 15K coming down in six months) Non of which either realtor claimed they had to disclose...We only found out about it by visiting the local municipality office. So now we are renting....first time in 22 years I am not a home owner....sure feels weird, and the search for the right property goes on!!!!! (and I piss 2K per month down the drain....) Good luck to you on your search!

mikesride: cash is a better deal simply because the buyer does not need to have a home assessment done, whereas a bank will require a home assessment to ensure that the load they are giving out would be covered should the mortgage go into default. A seller would rather just sell the home to someone paying cash knowing there is no mortgage bank that has the potential of NOT approving the loan if they believe the home is worth less than the loan amount.

In all fairness, if I had two offers, and one was cash, I would opt for the cash option. But in my case, I firmly believe that the deal was made with the other buyer even before the home hit the market, leaving us just caught in the wake.

-Z

It's the appraisal thing. In recent days past, as values started to rise appraiser's didn't' keep up , and houses sold for more than they would appraise for, making cash offers MUCH more attractive. This is easing a bit, but even so, not having to deal with a mortgage/appraisal contingency is one less thing.

With real estate, I've learned that it's not a done deal until it's a done deal. After terms are agreed upon, and both buyer and seller sign the same piece of paper, the real work begins, and many deals blow up before closing. Many deals fail because the buyer's financing falls apart somewhere along the way.

So if a buyer gets two offers, for the same amount, one is contingent of financing, and the other is cash, who gets the house?

Even when buyers have their financing all lined up and ready to go, it is customary to include a financing contingency so the Earnest Money is returned if there are hiccups along the way.

The other advantage of cash is closing quickly. Most offers with a financing contingency have a 30, or 60 days to close.

I've offered cash with closing within a week, sooner if closing docs are ready to sign. Buyers tend to like a quick, guaranteed closing.

Ahhh... Your explanations on cash over mortgage make sense now...I have only bought/sold three homes in my time and have never been asked for an appraised value on any property. I get a pre approval letter from the bank stating cash is available at closing and BOOM!!! your done! I guess things vary from market to market or in this case country to country.;)

"Market to market" is correct. In a slow/buyer's market, sellers will take whatever terms they can get to sell a property. I've seen people buy houses on a contract for deed in the old days with no financing in place and basically no money.

It's a little different now in southern California. :cool:

In May '13 we listed our home and had multiple offers within the week. We had one open house that resulted in an offer and the following day two private showings that resulted in offers. Offer #1 was full asking with traditional financing, #2 was $10K over asking but buyers needed to borrow the down payment, #3 was $20K under asking but cash deal. We countered #3 at +$10K which they accepted. The lack of surprises in closing that deal was worth it to us.

Why did New York end up with all the lawyers and Jersey got all the toxic waste?

Jersey had first choice ;)

"Jersey girls ain't trash. Trash gets picked up." :)


Man, that state takes it in the shorts a lot.

May I add to this?

Appraisal will sometimes kill the deal even if the offer is over the asking. Appraisers are not Gods, but their opinion is once is down on paper. With cash, there is no appraisal, so its a done deal.

And if I may add to the add-on : It's even weirder. Say you are selling for 500K. The buyer has 400K cash (which is great) and is borrowing 100 (peanuts, in %). If the appraisal comes up at 490, the deal falls through!!! At best they renegociate (while there might have been a bidding war of folks willing to pay even more, say 520!). At worse, no loan. Appraisal is a PITA for the seller...

Can someone explain the above to me (it was the case with our buyer)? The bank is COVERED, if the buyer doesn't pay his mortgage, they own a 490K house (in their estimation) for 100K! Sure they're not in the business of buying homes, but that's a heck of a good deal for the bank! According to my realtor, appraisals have derailed deals many times in recent past, so now they provide lots of favorable comps to the appraiser... Thats the only thing they were nervous about in our deal...

PS: Buying can be annoying, especially when you make a good offer and get beaten to the prize. But trust me, selling sucks 10x more. And that's with me selling in a seller's market, in 3 days, with 3 offers. Still sucked 10x more... Other than all the inspections and contingencies, the whole process is bizarre - some deals would have you lift contingencies 3 days before closing, good luck moving out in that time frame!

Pretty well sums it up.

I've never heard of such a scenario. A nervous buyer might have an appraisal contingency separate from any bank requirement. But on an 80% cash deal, I've never heard of such a thing.

Where its a problem is where the borrower is on the edge of loan/value and the appraisal doesn't support the selling price.