Cash Offers in 2017 and Getting an Appraisal on a Cash Deal

Cash Offers in 2017 and Getting an Appraisal on a Cash Deal

📰 Ask the Colorado Dream House Team 📉

Welcome to today’s show with your host Dan Polimino! 
• What’s your home worth?
• How many deals were cash offers in 2017?
• Should you get an appraisal on a cash deal?

All reported sales were not necessarily listed or sold by the broker and are intended only to show trends in the area or shall separately identify the broker’s own sales activity. 

Full Transcript

Hi everyone and welcome to Ask the Colorado Dream House Team. I'm your host Dan Palimino coming to you live from Denver Colorado. Happy Thursday everybody. Well if you're new to the show welcome we're glad you're watching. And every Tuesday and Thursday right here on Facebook we answer all the questions related to real estate. Buying selling or investing in real estate. This is the place to come. Just ask us a question and you can do it right here on Facebook. You can just leave a comment or question. And then who knows will me use it in a future show or you can call us. At 7 2 0 4 4 6 6 3 2 5. We're team at Colorado Dream House dot com. We'd love to hear from you. And again if you're in Denver and you're thinking about buying selling or investing in real estate please give us a call. We'd love an opportunity to chat with you. Two things we'd like to accomplish every show we like to give you some news you can use and of course we like to answer your questions.

Speaker 2

00:59

So let's get to the news you can use part which is today. What is your home worth. So really highly educated thoroughly researched subjective. Guess. It is. You know there are so many factors that come into play when trying to price a home. The location the finishes the layout the size of the lot. Just there's a lot that comes into play and people are always struggling with trying to figure out what their home is worth. They go on these automated valuation sites like Zillow and they say oh my home was worth what Zillow says it is well you know the reality is that Zillow is plus or minus 15 to 20 percent. And so are you on the minus side or you're on the plus side. It's not all that accurate. There's a lot of automated home valuation sites that really truly are not all that accurate. You know all real estate really is local and it's hyper local. So you've got to really look at your particular city you got to look at your particular neighborhood. You probably got to look at what's happening within a half mile radius and most of all you gotta consider. What an appraiser is looking at because for the most part your home is going to be sold 85 percent of the time to somebody getting a loan. And if somebody is getting a loan they're going to have an appraiser. So what does an appraiser use what are his or her criteria for figuring out the value of your home. First and foremost. They are charged with trying to find an exact match. With your house. Similar square footage same site same bedrooms and bathrooms same style same size lot. Can't really use a ranch with a two story. So again they're charged first and foremost with finding the exact match. That's number one. Number two they are charged with trying to find an exact match within a half mile radius. Of your home. Can they go out further. They could but if they're within a half mile radius that's ideally what lenders want to see. Third and final they are charged with trying to find an exact match within a half mile radius within the last six months. If it's within the last three months even better but within the last six months now those three variables. The one no no. That they can't change is the 6 month rule. They can't go back farther than six months. To take a look at value. Lenders don't like that. They can go out to a different area. They can go out to a different city they go out to a different part of the state to find an exact match. They're not large loud to change the six month rule. So keep that in mind. So when we're valuing your house. The true value of your house is not what you think it's worth. Not how much money you've put into it and spend into it not how much your neighbor thinks it's worth. Or a family member. The only true value of your home is what does the comparables say. Within a half mile radius of your house. What other homes are active under contract and sold within a half mile radius. That looks like an exact match and have sold within the last 6 months. That is the only thing that matters. Again it's not what you want out of it. It's not what I say it's worth. It's not what the neighbors say it worth it's not how much money you put into it it's not how much how much you have to net none of that matters. Only thing that matters are the comparable sales within a half mile radius of the home. I hope that helps and you can yell at me and be mad. And say Go danzon that's fine. I've been doing this a long time and I know that's what matters. OK. Dear Colorado Dreamhouse team let's get to the questions. How many of last year's sales were cash deals. Great question. Let's say I run up against a seller that says that their home is worth two hundred thousand dollars more than what I said. Let's say I thought the house is worth a million bucks and they think it's worth a million too. And I say to them OK let's assume that for a second let's say you're right it is worth a million to and let's say some Cinderella buyer comes off the street and pays you a million too. How are we going to get that to appraise. And then they usually scratch their head and they go I don't know how are we going to get that to appraise. And I say to them we're not. And then they say. Well what if we just you know what if we just solicit for cash offers cash offers only. Say OK we could do that. But last year. Of all the deals done 60000 homes sold in Denver only about 15 percent were cash deals. And of those 15 percent. They were deals generally 350000 and below. So if you're OK. With eliminating 85 percent of the buyers in the market who are getting a loan you don't want their offer you don't want them to look at your house if you don't want them to buy your house if you're ok with say no to them. And you just want to stick with the 15 percent. That could potentially pay cash. OK. Let's do that. You're not going to have any showings or any at all for very few. Right. You got to think big picture here you got to think about all of the variables. Cash deals are nice. But they're very rare and they don't make up a majority of the market. Dear Colorado Dreamhouse team we kept getting kept getting beat out for homes that we want to buy by other people offering a cash deal. Do you think they are really paying cash or are they just saying that at contract to win the home. Great question. Yeah there are contracts being submitted on lower end homes that are showing as an all cash deal but when in reality the buyer has every intention of changing the terms of the contract and getting a loan. And the contract in Colorado allows people to do that. There is a provision in there that says the buyer has a right to change their financing terms as long as it doesn't negatively impact the transaction. Now I guess we could have an argument about whether or not getting a loan negatively impacts the transaction but I think you're going to have a hard case. The one thing that usually happens is that you write the contract as a cash deal and you leave out the appraisal provision. You leave that blank because why would you need to get an appraisal if you're doing a cash deal. And so if you do switch from cash to a loan midway through the transaction just to understand that you're not going to have the appraisal protection and provision from the contract. In case the house doesn't appraise. All right. But to answer your question. Are there people presenting offers that look like cash deals and they're not going to be cash deals. Yes it does happen. Did Colorado Dreamhouse team how many people these days are getting an appraisal even though they're paying cash and there's no lender involved. More and more and more you would be surprised the people that I have represented that were offering cash deals. They are asking me to put in the appraisal provision and the date and deadline in the contract. And of course the listing agent and the seller come back to me and they say well why do you need an appraisal when in fact you're paying cash. And my answer is always the same because my guy wants to make sure that he's not overpaid. And they say well they're not going to be able to get out of the contract and contrary contraries yes they they can't get out. If they put a date and deadline it enacted the appraisal provision in the contract they can't get out of it even though they're paying cash. And I see more and more cash buyers. Putting in an appraisal contingency just to make sure they're not overpaid. All right. Hope that answers your question. Well that's today's all of today's questions. Remember don't forget to check out our 250 marketing guarantee. It basically says this. If you're thinking about selling your home. Coming up in the spring selling season which by the way is less than 60 days away. So if you're thinking about selling your home. Interview the Colorado Dreamhouse team. We'll show you our marketing plan for your home. We believe it's better than everybody else's and we'll put our money where our mouth is. You can either view our competition and if our competition's marketing plan is better than ours you can hire them and we'll pay you 250 dollars. It's that simple. Check out all the details at Colorado Dreamhouse dot com forward slash 250. And we look forward to hearing from you. All right everybody. Have a great weekend. That's today's show. We'll see again on Tuesday afternoon.

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