Home Buyers With TBD Mortgage Approvals As Pre-Approvals

Home Buyers With TBD Mortgage Approvals As Pre-Approvals

This BLOG On Home Buyers With TBD Mortgage Approvals As Pre-Approvals Was UPDATED On February 3rd, 2019

Cash Offer Buyers Hurting First Time Home Buyers.

  • Now cash buyers can compete with home buyers with TBD Mortgage Approvals
  • All pre-approvals issued by Gustan Cho Associates at Loan Cabin Inc. are TBD Mortgage Approvals
  • TBD Mortgage Approvals are full credit approvals that has been fully underwritten and signed off by our mortgage underwriters
  • TBD Mortgage Approvals are loan commitments and the only condition that is missing is the property

How Sellers Give Priority To Cash Offers

First time home buyers in hot market areas like most counties in the state of Florida are experiencing where sellers are treating them like second hand citizens:

  • This is because they are not cash buyers
  • It is a buyers market and many first time home buyers had experienced what most home buyers have not experienced since the real estate and credit collapse of 2008

Home Buyers with TBD Mortgage Approvals now can compete with cash home buyers.

TBD Mortgage Approvals Are Loan Commitments

Home Buyers With TBD Mortgage Approvals can rest assured that their loans will not just close but close on time.

  • The real estate market is recovering and homes were selling about list prices by cash offer home buyers, especially in Florida
    • Most homes stay on the market for 60 to 90 days
    • But homes were selling within hours of being listed
    • For example, one of my Florida clients who had a foreclosure in the past waited patiently for their three year waiting period to expire and finally got a pre-approval letter March, 2013
    • These clients were so ecstatic that they thought they were going to find their dream home and have a real estate purchased contract

Bidding War On Home Purchase

Unfortunately, every house they were going to place a purchase offer were outbidded by cash buyers.

  • Home Buyers armed with pre-approval letters were often ignored when competing with cash buyers
  • However, those armed with TBD Mortgage Approvals is the same as being a cash buyer

This is because they were fully underwritten and that TBD Mortgage Approvals is signed off by our mortgage underwriters.

  • Some of these properties sold for over 10 plus percent above the asking price
  • Eventually, when the real estate market slowed down in October of 2013, my clients was able to put a purchase offer and closed in December
  • A lot of these cash offer home buyers are institutions and investors who are buying up blocks at a time
  • Fortunately, home demand by investors has tapered off somewhat
  • But many home buyers are still running into competition from cash offer home buyers which potentially can hurt their chances of buying their dream home

 Cash Offer Home Buyers

Cash offer home buyers vary on how they place purchase offers on a home.

  • Some cash offer home buyers will still want appraisals done and home inspections done
  • First time home buyers can still compete with these types of cash offer home buyers if they have a strong pre-approval letter and come up with a large earnest money deposit
  • However, there are cash offer home buyers who will offer an as-is purchase with no appraisal or home inspection contingency as well as a quick fast closing
  • These types of cash offer home buyers are very hard to compete with and the chances are that the home sellers will go with these investors instead of entertaining purchase offer

Competing With Cash Offer Home Buyers

Home Buyers who are competing with cash offer home buyers and get into a bidding war need to know and realize the risks involved in buying a home above the list price.

  • Most sellers are represented by professional real estate agents
  • The real estate agent is most likely the person who recommended the listing price to the seller
  • The listing price was probably derived by the market value of similar and like homes in the area
  • The major issue that a home buyer competing with a cash offer home buyer has is if they purchase the home over the list price will the subject property appraise out? 
  • If the property does not appraise over the list price, the home buyer needs to come up with the cash difference between the sales price and the appraised value price
  • Home buyers who really want the property are willing to pay the difference but need to make sure that they will not financially strain themselves

Inventory Versus Demand

Shopping for a home is like looking to adopt a puppy.

  • When you adopt a dog, you want to make sure that the dog’s personality will fit yours and the family’s personality
  • The new dog will be a member of the family for ten plus years
  • Owners do not want to adopt a dog with bad genes and DNAs where it turns out to be a biter for the rest of his life
  • Take time in shopping for a home
  • Home buyers will get outbidded by cash offer home buyers but homes come up everyday
  • It might take some time but getting into a bidding war is strongly not recommended

Home Buyers who need to qualify for mortgage with a direct national lender with no mortgage overlays on government and/or conventional loans can contact us at The Gustan Cho Team at Loan Cabin at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com. All of our pre-approvals are TBD Mortgage Approvals and are full credit loan approvals fully underwritten and signed off by our mortgage underwriters.

By Gustan Cho


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