[quote=Effective Demand]
I’m not assuming that higher offers have no chance of closing I am saying bidders simply don’t know that the contents of a higher offer so they can’t assume its a better offer than the one they made.
There is a risk/reward component in offers for banks. Cash offers are lower risk, therefore lower reward. FHA can be higher risk (the risk of not closing and the market passing you by) but they may net more. With any financed offer you get appraisal risk, inspection risk, risk of borrower being able to close, etc. So without knowing how “risky” one offer is you can’t evaluate if it is truely a competing bid. Just something to watch out for.
Yes there multiple offers on many properties. But the number of offers that the seller realistically considers based solely on the financing type, inspection contingencies, concessions, and earnest money is a much smaller.[/quote]
That always was the problem and always will be the problem, until we go into an auction type system. We never know what kind of offers are out there. All we really know is how many offers we’re competing with. It can be all cash that’s less than your traditional 20% down offer, or it can be FHA w/ cash back well above your offer. If you didn’t get the house you bid on, that means the risk/reward of your offer wasn’t good enough for the seller. I agree with you that every offer has a risk/reward attached to it and it’s up to the seller/bank to determine what works best for them.
Do you have data on your last paragraph or is that just speculation?
