Ready but can’t buy a house?
Friday, August 27, 2010
So you’re qualified, you have the prefect house picked out, you put in an offer your agent is sure will be “best in show” and you are out bid…
You keep hearing that it’s a great market to buy but this is the third time you have lost a bid on a great house.
In this market, many regular people are losing out to cash buyers, but why….
A young couple just starting out get qualified for a loan (let’s say $300K). They find a nice place asking $275K but feel that someone else will love it as much and out bid them and pay more… So they bid $300K and the appraisal comes in at $280.
The problem here is that most lenders will not lend over the amount that the property has appraised for ($280 in this example). So when someone makes a cash offer – they don’t have to worry about a lender or an appraisal. They can bid $285 cash vs. a $300 loan and the cash offer will win – again because they are not limited by a lender.
Why would some pay more for a home than it is appraised for? That is a discussion for next time…. Can’t wait? Feel free to call me.