Let me back up a step and explain what the situation was. In this particular transaction, we had two offers: Buyer #1, an owner occupied offer, came in just slightly over asking but with a credit making it essentially asking price. 80/20 loan with a 45 day close that suited both the buyer and seller’s timelines. This is the offer we took, and then later that day, after all the signatures had dried, we received an all cash, 20 day backup from an investor for full asking price from Buyer #2. Buyer #1 ran a regular home and pest inspection – both of which came back with such minor things that he waived a request for repairs or doing further reports. In the end though, he could not get his financing to clear in time and the deal fell through right around 20 days to close. In comes Buyer #2 and we begin our new escrow.
The great thing about having a backup with cash meant that we did not need to worry about the loan falling through a second time. There was no waiting for final approvals or information sitting with underwriting or an appraisal coming back at the correct amount. Two less headaches, two less hurdles. But just because those were cleared away in this particular case, doesn’t mean the rest of the process stopped. And so we get to my first point: He still had an inspection period. Buyer #2 decided to not run new home or pest inspections BUT he did decide he wanted to run a sewer check. And sure enough, the sewer check uncovered roughly $4500 in damages to the sewer line that previous inspections did not show. $4500 in credits the buyer wanted – or he would walk completely.
Here’s where my second point comes in: each buyer is different. As I’ve said earlier, each buyer has different motivations and different personalities. Where the first buyer was willing to negotiate things, the second buyer was a hard-lined business man with a bit of a volatile temper who did not want to incur the extra issues and didn’t have the emotional connection to the home. He was perfectly okay to walk away and not think twice about it. The sellers had a difficult choice in front of them and one they understandably resented to some extent having to make.
In the end, the home sold for more than the sellers anticipated getting for it, and on their timetable (although the buyer did try to push out closing and it was a little hairy there at the end!). Overall I chalk the sale up to a win. At the same time, I feel bad that the seller’s didn’t have the overall experience they were expecting with Buyer #2 because they expected cash to equate it being perfect. Real estate is a complicated and emotional process. For most people, we’re not only dealing with the largest asset they own but also one of their basic needs: shelter. My job is to minimize the complications and smooth out any wrinkles. In the end, that’s exactly what happened. But at the same time it’s important to note that minimizing does not mean removing completely and things could still potentially happen. I try to look back after every sale to see what I could’ve done differently and see if there is anything I can take away to improve myself. What could I have done differently here? Perhaps I could have emphasized that while cash is a great back up option to have, and yes – it does have less hoops to jump through – it will still have many similarities to a traditional sale. When dealing with different parties and different circumstances, there will be different potential snags and that as their agent, I will do my best to be sure the deal is as smooth as I can make it for them regardless of if it’s cash or if it’s a loan.
If you’d like more information on the San Fernando Valley or Los Angeles, or to have help looking for your next home, please feel free to reach out! I’m happy to help, no obligation.