Rookie Negotiator question - Posted by Matt

Posted by CLAIR_MO on April 11, 2002 at 08:53:55:

Matt, It seems that the realtor isn’t sure what you are asking him/her to present to the seller which is too often the case with realtors who have been trained in conventional means of funding through banks, etc. Most realtors that I have come into contact with frowned on creative methods of financing because they aren’t trained to think creatively. I’m not putting all realtors down by any means because of their training in the old conventional methods and thinking that a person has to have a good job and good credit in buying property. Ask questions of realtors to see if they own rental properties…How did they bought the properties? You might want to write down exactly what you have in mind and having the realtor read exactly what you wrote down. Pay attention to their gestures and how they read your offer then you will have some idea if you can work with the realtor.

Rookie Negotiator question - Posted by Matt

Posted by Matt on April 11, 2002 at 03:40:08:

Hi all, new guy question regarding negotiation.
Correct me if i’m wrong, and I very well might be as a rookie.

If I am qualified for a loan, am I in a position to ask the seller, or get a realtor to ask the seller, what the least amount he would take for an all cash quick close deal?

Since I am borrowing from a lender and not the seller, am I not paying the seller cash?

I’m dealing with a realtor in which i’m getting the impression that this is not the case. The realtor wants to know how i’m paying for the home? Realtor wrote:
“It doesn’t matter to me other
than when I represent you, it is to your best interest if I am clear on how you are
purchasing it so that I can use that information to your advantage.”

Any help is appreciated, thanks!

Re: Rookie Negotiator question - Posted by eric-fl

Posted by eric-fl on April 11, 2002 at 09:57:20:

Ken’s response below is correct. To add to it, let me state: In your post, you mention that you are “qualified”, and then ask if this can be considered all-cash, quick close. If you use Ken’s methodology below, the answer is yes, but his answer is assuming you really do have a ready source of financing. Being “qualified” for a loan is not at all the same thing. Mortgage brokers run what’s called an “infile” on new propects (that’s what you are to them), and this is basically just a cursory credit check, and a comparison of your income/debt ratio. Then based on that information they state that you would qualify for a loan in the amount of x. Here’s a little test to run - next time you are sitting in someone’s office who tells you that, ask this magic question: “Ok, then, can I have a letter of commitment?” They’ll stare at you blankly for a second, and say “you mean a pre-qual letter? sure…” and you say, “No, an actual letter from the lender that is a commitment for the amount of financing you had stated I was qualified for.” Further explain that you need this to go shopping - unlike most people who go find a house and then try to finance it, you want to have all the financing arranged, and then go find a house. They may balk and tell you that the pre-qual letter is good enough, which it is for conventional, but not “all-cash, quick-close” offers. They may also protest and say they need a contract before they can do that, but here’s the issue - once you get that contract, then the real race begins. Now they want w-2’s, 1040’s, bank statements, pay stubs, all kinds of stuff they didn’t need to “qualify” you. Tell them you want to square away all that stuff up front, just as if they were getting ready to send the package to underwriting - more magic words. Because, you see, ultimately, the loan officer or broker doesn’t actually approve your financing, underwriting does. Or, in a smaller shop, the actual investors who are lending the money. Either way, if you want to shop with loans like they were cash, you need a hard commitment, and a pre-qual isn’t that. Most people making all-cash offers either have the cash, or know they can get it quickly, such as from a line of credit. But if you are going to do it with loans, you’ll need to approximate the steps above in preparation for it.