Re:How Zillow's homebuying scheme lost $881M
by xenadu02 on Sunday March 20, 2022 @06:26AM
(#30741517)
At least in the SF market what matters is a financing contingency, not all cash vs mortgage. As long as you go through underwriting first and get full approval (not pre-approval) an offer with a mortgage and no financing contingency is 99% as good as an all-cash offer. Sellers are not impressed by cash offers anymore unless they're the high bidder... in which case it is the high offer not the cash nature that matters.
And lenders that work in SF understand how this works and indeed can go through full underwriting without a property having been selected. Appraisal is the only thing that might matter which is why it is a good idea to hold back some cash.
While it is true cash offers in the strict sense mean real cash, it may also mean no-contingency offers. You can go through mortgage underwriting first and commit to pay the gap between appraised value and deal value, and can make a no-contingency offer with minimum risk. Or, if you are willing to lose your deposit (usually 3-5%) you can also make a no-contingency offer to be more attractive.
Re:How Zillow's homebuying scheme lost $881M
by karpierz on Friday March 18, 2022 @05:40PM
(#30727901)
> You can go through mortgage underwriting first and commit to pay the gap between appraised value and deal value, and can make a no-contingency offer with minimum risk.
Of course, but unless the amount you commit to bridge is unbounded, you're still contingent in appraisal price. And if you did commit to that, you're just making a cash offer with extra steps.
Deposits in my experience are token (around 2%). And usually sellers will verify that you have the cash on hand for no-contingency offers, since 2% is not worth waiting and then redoing the house selling process.
For example: the bank will only loan you money up to the appraised value of the home, which is done after the deal is signed (banks won't send an appraiser to every house you make an offer on). If the appraiser says the house is worth 500K and you bid 800K, you need to find 300K some other way (usually cash) or the deal falls through.