All Forum Posts by: Joel Case

@Patrick Drury is right about the letters I think. I always toss those right in the trash...but I also ditch the phone calls as well. There should be another way, not sure what it is exactly......?

@Joel Case
Cold calling would be the most effective way and best use of time. A lot of wholesalers try direct mail and that will most likely result in you blending in with them. You need to farm an area constantly with letters to get anything. Cold calling could be as simple as picking up the phone and getting a seller in 5 mins that wants to sell for a good price. Cold calling is the best method for sourcing off-market deals. If you are writing letters, you could be writing letters for months without actually having a dialogue with a seller or anything to show for it. 

@Joel Case
If you have a VA loan available to you, you should use it. Do not under any circumstances, try to use hard money. Based on what you have said you won't be able to afford it based on the down payment, and the interest rate will be a lot higher. Just keep plugging away your going to get one. If I were you, I would start calling property owners of where you are looking at buying and see if they would consider selling for a price that you are looking to buy it for. Don't ask, don't get!

Quote from @Ryan Kelly:

@Joel Case just use a service like Homeward if it is in your market. They will make an all-cash offer for you and purchase the home, and at the same time, they will offer you the loan to buy it from them. I think they offer a VA loan option. Pretty smooth.

Not available in my area, but thank you. 

@Joel Case just use a service like Homeward if it is in your market. They will make an all-cash offer for you and purchase the home, and at the same time, they will offer you the loan to buy it from them. I think they offer a VA loan option. Pretty smooth.

There are a few companies out there looking to solve this problem. I don't know if they're active in your area, but check out Ribbon, Fly Homes, Knock, Orchard, Homeward. 

These companies have some version of purchasing the property cash and selling it back to you for financing and collecting a fee for doing so. But if you're offering $15k over asking anyway, this could actually help you save money. And get you a property. 

Quote from @Joel Case:

Quote from @David M.:

@Joel Case

Hard money loans are for non-owner occupation...  They are like cash, but its still a loan...

Yes, its definitely still a tough market. What are you doing for your EMD (I realize you don't have much cash...)? Do you also have a home sale contingency?

$5k EMD, $2k appraisal gap, $15k over asking, $2k escalator clause up to $35k over asking, appraisal and inspection contingency. I could non-owner-occupy as my goal is to STR after 1 year of occupying. I just don't know the LTV of hard money lenders, etc.

@Steven Foster Wilson I am currently networking with real estate agents for pocket listings, off markets. Will be attending the next REIA meeting as well.

$5k EMD, $2k appraisal gap, $15k over asking, $2k escalator clause up to $35k over asking, appraisal and inspection contingency.

Not sure where you are or if your market has completely shifted already but in my market:

5k EMD is only 1% -- that's not going to win any competitions.  I coach my buyers to start at 2% up front and another 1% after inspections.  That can be the deciding factor.

If you're writing an appraisal gap coverage, it should cover the amount over asking that you are offering.  We're not completely waiving appraisals here anymore, but as long as a house is priced reasonably, then an offer should cover the over ask amount, otherwise you're telling the seller that you're going to renegotiate after the appraisal anyway.  Also -- you can't really waive appraisal on a VA loan.  The VA addendum specifically states that it is dependent on an appraisal.

Market-dependent, but most sellers and brokers in my market don't like escalation clauses.  Plus yours has the same issues as stated above -- you need the cash to cover the gap between asking and offer price.

Appraisal contingency means that a cash offer without appraisal worries will always look better, especially since you're not at a down payment that could eliminate worry (i.e. 20+%)

Inspections are normal -- you're not losing anything there except in the few cases where a cash buyer waives all inspections and makes the EMD immediately non-refundable.

So, you're going to want to look at the houses that have been on the market for longer than the median DOM. The ones that the sellers are worrying that they have no offers and especially no cash offers! They will look at VA a lot more seriously after a few weeks! The good news is that there are a lot more of those than a few months ago -- no matter what market you're in.

@Joel Case

Until the market actually slows down, I personally don't think putting a short sunset date or even early offer will help.  Its a shot, but sellers know that other offers will come in.  So no point in rushing to take yours.  I've had "savier" sellers also "realize or feel" that this offer/buyer is pushy and might not make for a good buyer.  So, even if they made another offer later they were already had a "bad taste."

It's not your VA Financing that's the problem - it's just dang hard to beat a cash deal. And, there's a lot of cash floating around. With the stock market in roller coaster mode, more investors are looking to pull out and invest in less volatile investments aka real estate.

If you were losing to our mortgage financing options, I could give you a ton of recommendations but when it comes to cash, cash is king.  But there is one thing you can do - be the first one in!  Instruct your realtor to let the listing agent know you want an answer on your offer immediately.  Don't give 24 hours - give 2 hours for the seller to respond.  If you can stalk the market for the next great find, get into see it same day and force the close, you can beat the herd to the punch.

Keep the faith and "feel the need for speed..."  You'll get it and it will the one worth all this drama.  Fingers crossed...

Quote from @Joel Case:

Quote from @Erik Browning:

Hey @Joel Case it's likely not you as they buyer/investor that is the issue, or that you are getting beat by all cash offers - it's the agent representing you. 

Older and more seasoned agents routinely were told that VA loans are not good loans because it requires them to do slightly more work. Specifically, the home has to pass and remedy (if any) active pest infestations. Additionally, these old guard agents don't like that the VA loan has an amendatory clause, which give you the right of pulling out of the deal - a contingency if you will.

There is A TON of misinformation regarding the VA loan, "it's more expensive, there are extra fees, appraisals are more strict." None of this is true. While fees are different than conventional, it is absolutely not more expensive (I'll show a chart below to demonstrate this) and VA loans get the best interest rates, no PMI, and best of all: 0% down payment.

If your agent is not winning you deals, it's because they are doing a bad job at seeking out information that serves the seller's interest. If the seller is only interested in 10 day cash closings - then maybe that home is not the best fit for you. Perhaps find homes where the seller is looking for a rent-back or the highest purchase price. Having an all-cash hard money loan is substantially more expensive and when you go to refinance, your loan will likely be 10's of thousands of dollars more than what the home is worth - don't do it. Get a new agent and have a discussion with them about finding the seller's motivation. THIS POST summarizes a conversation with an agent I had once.

Depending on where you are, I can recommend an agent that is an advocate for veterans and has a successful record of getting vets into homes.

Conventional vs. VA loan chart as promised (pay attention to Cash Required and Gain On Sale rows):

I read through your thread when you posted actually. I instructed my agent to find the seller's motivation and work towards that, she stated they didn't need any leaseback but I also feel that she may have done the bare minimum as I told her to find the seller's motivation and let them know that we would be accomodating to whatever it was they needed as we can be as flexible as we need to be. 

I have reached out to my lender to see if a fully underwritten pre-approval is an option after doing some research on my own. That should put me in a similar situation to a cash offer aside from inspection and appraisal. 
 

 Good call, this is a solid strategy as well. Depending on who your lender is, they may not offer pre-underwriting. For example, my best-priced lender at the moment does not offer them, however slightly less-attractive lenders (rate-specific) that I work with offers pre-underwriting... that's the trade off. A good broker will make sure your file is bulletproof prior to issuing a pre-approval, which may give confidence to both you and the agent to remove the loan contingency.

Best of luck!