Why does my loan type matter to a seller? Loan types you typically see are Conventional, FHA, and VA. Each have their own set of benefits for buyers, but why does a seller care what type of loan a buyer is using?
- One of the main reasons a seller might favor one offer over another due to financing type, again comes down to the cost to a seller, and risk assessment of the transaction falling apart down the road. Some loans have a slightly higher fee that the seller is required to pay at closing, while others have no fee due from the seller. When two offers are close in offer amount, a seller might choose one offer over another based on the tiniest of details.
- Some loans have stricter qualifications on the condition of the home. This goes back to the appraisal and work orders. A Conventional loan typically is the least strict on condition, out of the financing options listed above. It is possible to have work orders come back on a house being purchased using a Conventional loan.
- Some loans require little to no money down. Why does a seller care how much you’re putting down? Typically a buyer putting a higher amount of money down looks more solid to a seller, meaning it is less likely their financing will fall apart towards the end of a transaction, causing the deal to die. Another reason a larger down payment looks attractive to a seller is typically sellers want to negotiate items that the buyers request them to fix after they have an inspection. Usually the goal for the sellers is to fix the least amount of items possible. If there are terms of an offer that indicate that the buyers might not have a ton of cash on hand (such as little to no down payment, or if they are using down payment assistance), the seller might worry about the buyer asking for more fixes on the inspection, or asking for a credit towards their closing costs to help them make fixes themselves after close. In summary, more cash can signal higher likelihood that the buyer(s) can handle fixes, and fees on their own, without asking for help from the seller(s).
When you have many offers all coming in around the same value, you get into weighing more of the gritty details like loan type, earnest money and down payment amount, closing date, inspection time, to the tiniest of details, more heavily.
As a buyer, your agent communicating with the listing agent prior to writing and submitting the offer to find out what terms the seller is looking for specifically can be enough to win you the house in multiple offer situations. If there are no other offers at first, and then other offers come in after you’ve submitted yours, your agent should follow up with the agent representing the seller and ask if there is anything you can do to sweeten the offer.
For more information about financing a home purchase, check out my blog post, Why Does a Seller Care If I’m Using Cash or a Loan to Buy Their House?
When I first sit down with people to help them understand the home-buying process, prepping them for the journey ahead, one of the topics I dive into is why a seller cares where the funds to buy the home are coming from. In the end they get paid the same, regardless of where it comes from, right?
A seller does care how you are purchasing their home, whether it be with cash, or by using a loan. It all comes down to risk assessment for them. The seller is weighing how likely the deal will survive. From the point of accepting your offer, making it through the inspection negotiations, getting passed the appraisal, to arriving to closing day, their payday. These are some of the factors they consider while reviewing your offer, especially if they are comparing your offer to other offers that around the same offer amount:
- Why do sellers prefer cash to loans?
- Cash offers don’t require an appraisal. Although including an addendum that makes the deal contingent upon a successful appraisal is still an option with cash offers. No appraisal means there is no risk of it appraising low (bank saying it is worth less than you’re offering), resulting in the bank not loaning the original amount to the buyers, which was offered to the sellers. In this event, the deal dies, the buyer brings more cash to close, or the buyer backs out and gets their earnest money refunded to them. A low appraisal is seen as a risk to the sellers, so not having to worry about that is generally appealing.
- No appraisal means, no work orders. Work orders are fixes required by the appraiser prior-to approving the appraised amount. It is possible to have work orders required, in-addition-to an appraisal coming in low. For example, you might offer 350k for a house, have it appraise for 325k, providing the seller install hand rails along the stairs out-front, and touch up paint on the exterior in the specified areas where it is chipping. Those are small work orders, but sometimes they require much larger, more expensive fixes, such as installing a new roof. Not having to stress about this process as a seller gives them one less thing to worry about and looks great in a competitive situation.
- Speedy close! Typically, you can close on a house with a cash offer in 1-2 weeks, depending on where the funds are located. This timeframe is half of the time it takes to close on a house with a buyer using a loan. Lenders typically ask for 30-45 days to close on a home using traditional financing. This varies depending on where you are at in the loan process and what type of financing you are using! Depending on the sellers situation, perhaps they don’t need a quick close, giving cash offers a little less of a competitive edge. Your agent should be reaching out to the listing agent (sellers representative) before writing/submitting your offer to make sure they are up to speed on what the sellers unique situation is, and what they are looking for.
- Less picky on inspection? Many of us working in Real Estate would argue this is not always the case, but if someone has the cash to buy a home outright, there is an idea that perhaps they will be less picky during the inspection negotiations. One of the arguments agents can make on behalf of their home buyers using traditional loans is, they don’t have the money to make the repairs. A seller might make the assumption that a person using cash has the funds to not be as picky about some of the smaller fixes needed that may come up on inspection.
Many people in the industry tout the phrase, cash is king! However, depending on what the seller is looking for, there are other ways you can make your offer more competitive, if you are using a loan. Do the sellers want a rent-back? Are they waiting for a job transfer and prefer a long close over a fast one?
Don’t despair if you get beat out by someone paying with cash. There are always more houses coming onto the market!
Address: 1314 S Fife Street Tacoma, WA 98405
Square Feet: 1,316
3/Bedrooms, 1.75 Baths
Offered At: $255,000
This Victorian home is located in Central Tacoma, near 6th avenue! The roof is brand new, as well as the flooring both on the main floor and upstairs, and there is fresh interior paint throughout! Right when you walk in, the bay windows provide tons of natural light and the 10 foot high ceilings add to it’s spacious, bright, and open feel. There is an unfinished basement, with ample storage space, along with the storage shed out back. Yard is fully fenced with deck for entertaining. Seller says,
“I will miss it’s Central location, it is easy to get to freeways and shopping.With 6th avenue so close we often walk down to Ice Cream Social, E-9, The Red Hot, & Blue Beard Coffee. We would often walk down to Franklin Park/ School and play on the play ground there and in the splash park in the summer. University of Puget Sound is not too far away either and is great for learning to ride a bike.”
The windows have light pouring in from all directions, which is one element the seller will miss the most,
“All of the natural light, if the sun is shining, it is usually streaming in one of the windows of the house from sun-up to sun-down. I also really enjoy the open living area in the house, it can and has been configured in many different ways.”
Off of the dining area are french doors that lead to the deck and side yard. The door to the left goes into the large, unfinished basement, which the sellers are currently using for storage.
One of the memories the seller shared with me was the moments using the deck and yard,
“The dogs playing in the yard, and family “happy hour” on the deck, where all three of us have our drink of choice and discuss our favorite parts of movies, talk about our day or even just all read together.”
The Kitchen is open to the living room, with a charming peek-a-boo window to the right, looking into the kitchen.
The kitchen is bright, and spacious! I asked the seller about some of her favorite memories in the house,
“My daughter taking her first steps in the living room, carving pumpkins on the kitchen floor..”
If you are someone who cares about the history of a home, this one is certainly loved and full of happy memories.
The staircase is located at the entrance of the home.
To the left is the room with the bathroom…
Charming claw-foot tub!
To the right is the second bedroom. As you can see, the upstairs gets tons of light as well.
Additional storage unit in the back.
2374 Court G, Tacoma WA, 98405
Square Feet: 1,539
3 Bedrooms/2.5 Baths
1 Car Garage
Offered At: $279,950
This modern and spacious 3 bedroom, 2.5 bath home has been updated since it was first purchased in 2014! Bright, clean feel from fresh interior paint and large windows throughout. Seller commented that the layout on the main floor is great for hosting guests- “Some of the best memories we have from this house are when friends were over. Whether it be for Thanksgiving or just a random Friday night, it was always a good time. The second floor (kitchen/living room) makes it really easy for everybody to be together when making food, watching a movie, or playing board games.”
The seller says he will miss being in such a convenient location-
“The proximity to everything you need. You’re a quick drive or Uber ride from anything. Any type of restaurant. Various grocery stores. Plenty of nightlife and entertainment. Movie theaters. Live theater. The mall is five minutes away. JBLM is a quick commute. More than a couple farmers markets are close by. We’ve been spoiled. With quick access to I5 and 705, you’re positioned in the perfect location.”
HOA dues cover regular upkeep of the walk ways, and mulch.
Right when you enter the home, there is a bathroom to your left, and a door to the garage on the right.
Once you go into the first set of stairs, you enter into the main living area, and kitchen.
Large windows surrounding the living space.
Air Conditioning to stay cool this summer!
Kitchen has new tile backsplash, and nice appliances that transfer to next owner.
Up the second set of stairs, you arrive to the second bathroom, and first two bedrooms.
Double sinks, and cute decorative panel wall.
Sellers used this room as an office, but you can fit a large bed and dresser in here. All rooms are spacious.
Large windows in every bedroom, providing tons of natural light.
Up the last set of stairs, leads you to the master bedroom.
Third bathroom right off of the master bedroom.
Lovely deck off of the master bedroom. Seller loved to BBQ on it!
3818 E K Street
Square Footage: 1,000
3 Bedrooms, 1 Bath
Fully Fenced Yard & Brand New Roof
New Heat Pump For Efficient Heating and Cooling
Offered At $195,000
Tucked away from the street, this affordable 3 bedroom, one bath home is located just a few blocks off of Mckinley and E 38th. Enjoy being super close to delicious Mexican food (breakfast, lunch, and dinner) at Antojos. They have a salsa and juice bar, and tasty tacos. You will also be near one of the coolest bars in Tacoma, Top of Tacoma. Less than 5 minutes away is the Lincoln District, where you will find plenty of grocery stores, and more places to eat.
New roof installed in May 2017. New heat pump reduced the seller’s utility bill.
The seller installed the privacy fence less than 2 years ago. Yard is equipped with a deck and patio for entertaining in the summers. The large yard would be great for gardening, or for your animals to prance freely in.
Spacious living room, freshly painted with new carpeting.
Living space is versatile. There are many ways you could set it up, and enough room to make it multi-functional.
Dining area, right off of the living room.
Large master bedroom to the right.
Plenty of closet space in the main bedroom.
Second bedroom can be used as guest room, or office.
There is additional space in the kitchen to add more counter space, or storage.
Third bedroom is through the kitchen.
Large third bedroom where laundry is located.
Square Footage: 1,690
3 Bedrooms, 1 Bath, Plus Bonus Room/Office Upstairs
4 Car Detached Garage/ Work Shop along with long driveway for guest parking
Fully Fenced Yard with Patio Space
Offered At $269,950
Just a few minutes drive down S Yakima, and you will find yourself in the heart of the lively Lincoln District. The seller enjoyed biking to Top of Tacoma, and sunny days spent at Alling Park. She raves about the coffee and customer service at the Doo Wop coffee shop.
“It is a real home that has history and was built with love and hard work! This house is full of so many wonderful memories. My favorite is the holidays every year because all my friends come over and we have just the biggest feast. We break open the holiday crackers and wear our crowns. So much laughter and love in this house. I will miss the comfort of this house…I hope whomever buys it will cherish it like I have.”
Get all the 1913 classic charm, with modern touches. This home features 3 BR/1 BA.
Coffered ceiling pillars, glass front built-ins, along with new roof, electrical updates, and hardwood floors.
Main bedroom and bathroom conveniently located on first floor.
Updated in 2015, the kitchen includes a cute nook for additional dining space.
Spacious bedroom upstairs with tons of natural light.
Second bedroom upstairs is currently being used as bright office space.
Bonus space upstairs makes a great office or your dream walk-in closet.
Giant shop/4 car garage with fully fenced yard, and patio space to entertain.
The real estate market in Tacoma, the past couple of years especially, has been difficult for buyers. There are multiple offers, low inventory, and folks with cash, eliminating the seller’s need to accept an offer from buyer using traditional financing, which requires additional steps like an appraisal.
While representing a buyer, it is my duty to present clients with all of the strategic options at their disposal for competing in this sellers’ market, and to encourage them to take advantage of options that are available to them to enhance their offer, and hopefully beat the competing offers.
The conflict for me is, what about tactics that I think muddy the ethical waters in Real Estate?
“Love letters” are commonly found in the real estate world, especially in competitive markets, where houses are receiving multiple offers. The letters I have seen typically include a cute little bio about the buyer’s family, what they like about the house, and their plans moving forward after they’ve completed the purchase. Some even include pictures of the buyers.
If you are like me, you might start to question the ethical validity of something like this. Sure, for the heteronormative, cis couple with an adorable child and golden retriever, this sounds like a wonderful tactic. But what if you are a gay, childless couple? A single woman? What if you are a gender nonconforming person trying to compete for the same house?
I have had gay and straight couples write letters, and there are times where a seller has loved the letter and hasn’t discriminated against my clients. However, I have had letters put my clients at a disadvantage as well.
I have seen my buyers lose in a competitive situation because the seller preferred a family move in rather than a single lady. This does happen. My question is how is this allowed?
I agree that as long as this is legal, we shouldn’t tell our buyers that they cant submit a letter to a seller. I have had clients write up some well thought out letters, focusing on the house and their plans, more than their personality and marital status. I have had clients submit the cute family photo, with no malice or ill will intended. I just can’t help but think of my clients who are scared that the seller won’t want to cooperate with them if they find out their identity. I have had gay clients worried about the seller being at the inspection and not liking that they are LGBTQ. There are concerns that some have to carry that others do not.
Some people may argue that the seller can’t break a contract because of these things, but they sure can make it difficult and discourage a smooth transaction; for example, not cooperating on needed repairs, or not allowing an extension of the closing date because of appraisal issues.
In some circumstances, a letter can backfire. What if the buyer writes about how much they love animals, and how they are looking forward to moving in with their three kitties, and the seller doesn’t like cats? Sometimes these details can be more detrimental than beneficial to the buyer’s competitiveness.
I don’t think people who write letters are doing a bad thing. I do however think that the letters inherently encourage bias, prejudices and favoritism based on factors that dance on the line of ethics in fair housing.
At a Glance
Square Feet: 1,222
Lot Square Feet: 6,000
3 Bedrooms, 1 Bath
Fenced Gravel Parking Space in Back, Off of Alley
Offered at $175,000
Located on a lovely, quiet street, this darling home offers character, essential updates (including new wiring, sewer line, and electrical panel), and a functional layout. The seller said that some of her favorite things about living here were,
“Dance parties in the kitchen, bbq’ing in the backyard, hanging out inside on a hot day (it stays pretty cool inside during the summer), and having a dedicated sewing/craft room upstairs.”
The house’s location allows for convenient access to I-5 and the ability to walk to the Sounder Train.
As far as what there is to do nearby, there is the Star Center for play, fitness, and community. Make sure to check out their indoor and outdoor play areas! Pop on over to Stone Gate Pizza for happy hour and live music 7 days a week! V&V Pho for your soup and Banh Mi fix, which is rumored to have the best vegetarian pho in Tacoma.
You will find hardwoods throughout the main level along with charming built-ins. Take in the colorful, eye-catching window!
The kitchen offers tons of storage and natural light. It has an adorable cut out breakfast nook.
Bright master bedroom located on the main level.
Updated bathroom, conveniently located for guests and easy access to both bedrooms on the main floor.
Second bedroom located on the main floor also has good natural light. Stairs lead up to the two bonus rooms.
The yard is large and fully fenced, with a new gravel parking area off of the alley. Enjoy fresh apples grown right in your backyard! There is an additional fenced side yard.
763 S 40th Street, Tacoma, WA 98418
At a Glance:
1,320 Sq. Ft.
6,000 Sq. Ft. Lot
3 Bedrooms/1 Bath
Detached, 2 Car Garage
This bright, cheerful, & clean home is located in the heart of the Lincoln District. Restaurants, shops, & markets just a couple of blocks away! Find some of the best sushi in town at Gari of Sushi. Yummy Vietnamese food nearby at Vien Dong. Buy affordable groceries at East Asia Supermarket!
The Lincoln District was recently granted money for a revitalization project. The project includes raising the power lines and pedestrian infastructure improvements. Read more about it on the City of Tacoma’s website, here!
Front door opens into the spacious living room. The floors are painted hardwood!
Right as you enter the front door, first room is to the right. Every room in this house has plenty of natural light.
As you walk straight through the living room, stairs are on the right.
At the top of the stairs, the master bedroom is located to the right. Large walk-in closet…
Master bedroom, walk-in closet with tons of room and storage options! There is more room to add storage if you wanted to.
Second bedroom upstairs, to the left. Currently used by owners as guest bedroom/office!
Living room leads to dining area and cute kitchen. The open floor-plan has an inviting & expansive feel.
Plenty of room for table and chairs off of the kitchen.
Updated kitchen with plenty of storage.
Large utility/laundry room! Washer and dryer are less than a year old. New flooring and trim just installed.
Extra toilet/”powder room” in the utility room.
Large, fully fenced backyard. Fence was installed last summer!
2 car garage with alley access! Store your items inside and/or park your vehicle(s).
Wondering where you can grab a bite to eat in the Lincoln District?
Check out these places to start!
I function best when my space is clean and orderly. I have spent quite a bit of money on mainstream cleaners in the past, until the past year or so when I discovered the beauty of making my own natural cleaning products. The cleaning solutions that I use at home are easy to make, affordable, effective, and safer than conventional cleaning products. Try them for yourself and long term you will see the benefits in your bank account and notice how much better you feel while using them!
1. The Steam Mop
When we purchased our steam mop, my life was forever changed! It has reusable pads, unlike other mops that create waste every single time you use them. It disinfects with heat+steam. You only need water! I like to add vinegar since it is another way to disinfect and it is an odor neutralizer. Here is a link to the one I own: http://www.amazon.com/SI-70-Multi-Multiple-Purpose-Steamer/dp/B005555WFI/ref=sr_1_1?ie=UTF8&qid=1453270300&sr=8-1&keywords=haan+steam+mop
2. White Vinegar
White vinegar is such a great product. It is cheap, versatile, and effective! I use white vinegar to dust surfaces, clean my fridge, and wash my floors. For surfaces, I mix 2 parts vinegar with 1 part water, and sometimes add a drop of dish soap and a few drops of essential oils. White vinegar is an odor neutralizer, so it is great for floors if you have animals. For my floors I use 1 part white vinegar and 2 parts water in my steam mop and occasionally add essential oils to the cleaning pads. Do not add the oils directly into the tank because it can cause the steam mop to become clogged!
3. Castile Soap
I love castile soap! There are many different scents but my favorite is peppermint. You can use this soap as body wash, shampoo, cleaner, and even fruit+veggie wash! It is heavily concentrated, so one big bottle lasts us 6+ months. I like to clean with just the soap, but I also mix castile soap and baking soda to make a scrubbing paste.
4. Baking Soda
Baking soda is one of my favorite products to clean with. Like white vinegar, it is cheap and an odor neutralizer. I use baking soda in my fridge, bathrooms, and rugs! Sprinkle the baking soda on carpets and leave for 15-20 minutes before vacuuming it up. Baking soda is great for sprinkling in your shoes to neutralize odors.
For more natural cleaning supply recipes, check out these sources:
Video, "Non-Toxic Cleaning Guide": https://www.youtube.com/watch?v=zEVOYRwfrkg
Article,"My Favorite Natural Cleaning Recipes": http://www.atypicalenglishhome.com/2014/09/my-favorite-natural-cleaning-recipes.html
Article, "Make These 69 Cleaning Products for Pennies": http://www.popsugar.com/smart-living/DIY-Cleaning-Products-28901279#photo-28901350