How Mortgage Buyers Can Compete With Cash Buyers

Last month 56 percent of all transactions in Clark County were all cash.

One result of this trend: borrowers who need to get a mortgage can’t compete with all cash offers. On August 5 the Sunday Business section of the Review-Journal shared the plight of Aaron Kessler, who made more than a dozen offers on Las Vegas homes. According to the paper, he always lost out to a cash buyer. He is still a renter.

Here’s why: borrowers who come with just a pre-qualification letter produce no guarantee they can actually close a loan. Sellers in this market can be choosy. They like cash deals because they know that the buyer can deliver.

The paper said it was “practically impossible for someone relying on a mortgage to buy here today.” My buyers, however, are having NO PROBLEM. 

Here’s the secret: Go through full loan underwriting before you start looking at a house. Your lender will then give you a loan approval letter subject to three things:

1. The house you eventually select appraises for the purchase price and/or you agree to pay the difference
2. The preliminary title report is clean
3. You still have your job on the day of closing

As anyone who has been a mortgagor in this market knows, it’s really tough to get a loan. Lenders are irrational. There is no guarantee their underwriter will give you the go-ahead. (Sometimes I think winning Megabucks has better odds.)

BETH Ellyn Rosenthal