Welcome to the Blue Button Broadcast. I'm David Wickert, President and Managing Owner, or my individual NMLS ID is three, two, eight, eight, four, seven, joined today by one Tim Holdmann, Senior Loan Consultant, and his NMLS ID, I have no idea because I still don't have it memorized, is what, Tim? Five, nine, three, one, four, six. Fantastic. Okay, Tim, I'm coming in hot today with, and I know I'm biased, but here's my hot take for sure. White hot, like in the fire, like when the fire has died down, but there's just like that ember right at the end of the fire. You have a fireplace in your house. You know what I'm talking about? Okay, come on. So I have two metaphors. A cash offer. I think I want to talk about both, but I guess we got to start with one. Two scenarios. Well, it's the same scenario. A cash offer is like dating someone who's way, way, way more attractive than you. Or a cash offer is like playing poker. Which one do you want to start with? I like poker. Let's go with that one. Okay. Okay. So, and I should say, I am, of course, biased. Like we would like to lend money to people in order to buy a house, duh. But at the same time, I think we take a long-term view about how we help our clients that maybe they don't need a mortgage right now, but we would like to just be in someone's orbit and be a person that helped them achieve the actual thing, which is buy a house, right? Absolutely. That's the name of the game. So the metaphor that the cash offer is like poker is the analogy is, you know, if you're a seller, you are listing your house for sale and the pot in the middle of the table, right, is the house. Work with me on this metaphor. And there's people sitting around the poker table. And one guy makes this amazing offer. A cash offer. Wow, that's a lot of chips. You know, I wonder what cards he's holding. I think so often other buyers just fold then like, oh man, like I can't compete. I'm not going to win. Yeah. Right. He just raised a thousand dollars at the poker table and it's a twenty dollar, you know, hand. He raised a thousand. It's like, well, I can't I can't compete with that. So there's two elements to this. One, if you're a buyer competing against another guy with a big stack of chips, don't count yourself out because if I'm a seller, I don't just take that giant raise at first glance. That one of my elements is if I, you know, I treat this like, what if I was selling my house? I want to almost push back or re-raise that person who is making that giant offer on my house to see, are you bluffing? Do you have a pair of twos and I just don't know it? to just see if they are as strong as their raise would lead them to believe. Am I torturing this metaphor or is this resonating with you? A little. So, I mean, you know, from the seller's perspective, they all want the most certain offer that's gonna close, right? Yes. And they also want the most amount of money. Those are really the two things that the seller wants. So from the buyer's perspective and their agent's, You know, traditionally, a cash offer is viewed as the best of both worlds as a way to get your offer accepted. Right. Because you're offering, you know, no contingencies. So it's basically certain that you're going to follow through and buy the house. Yep. And, you know, maybe you're not offering the best price, though. in lieu of that certainty, right? So there's a little bit of a give and a take there. And I'm curious what your thoughts are on why maybe not writing a cash offer would be the best for buyers. Well, so this kind of the certainty piece, the certainty to price give and take is an interesting dynamic. for sure let me just let me just say this if I got a cash offer on my house I would do at least I'm going to say two and a half things one I would counter just to test how serious are you cash buyer about buying my house? Because so let's say someone writes me an offer for my house for three hundred thousand dollars. I'm going I'm going to do a counter at some not an insulting level. Let's say you offer me three hundred. I'm going to say how's about three oh three. Sure. Because the reaction to my counter is going to teach me a lot as the seller. There are three ways that I thought of. One, on my re-raise, again, on my poker metaphor, on the re-raise, If the buyer's like, if they have the most childish reaction, like, oh my God, how dare you up the ante on my cash offer? It's like, wow, I'm so glad I learned that now that you think that you are God's gift to sellers. Because maybe then I don't want you to be the person that I sell to because it's going to be aggravation the rest of the way. Maybe in my re-raise, option two in my re-raise, they give an adult reaction. They say, you know what? We respect your counteroffer, but no, this is the price that we are willing to pay for the house. Great. At least then I know that I've got adults on the other side of the table. And you know that they put their best foot forward on day one. They put forward the... strongest offer that they're willing to make at least in terms of price right well it wears is that a bluff is that is that not a bluff it's like I'm sitting on ace uh ten but I'm not sitting on ace king is that the poker I don't know I know nothing about poker okay that works okay that was the second the third if I again in my example I they offer three hundred I just counter it you know If their response is this thirsty, like, I will do whatever it takes for you to say yes, it's like, amazing. At least then that I know that that is who you are as a buyer and that I am still in control, I think, to your earlier point in a little bit. Yes, you wrote me a cash offer, but you are ready to do almost whatever it takes to get into this house. Yeah. And you're not... I think a cash buyer thinks that they're better than everyone because of their suitcase of cash. But if you have the right kind of buyer who is utilizing their cash offer as a tool, because they're not trying to, they're trying to win without the slaughter rule, like it's baseball. You can learn all of that. Again, if this was me, David, Thank you for your offer for three hundred thousand dollars. I'm going to counter you at three or three. You're going to learn a lot just by just by making that counteroffer. And that's what you to your earlier point, Tim, a seller wants certainty and safety. Well, if you just say yes to the cash offer without kind of like interviewing who the offer is, you have no idea who these people are. You're just, you're just impressed by it being a cash offer. And I think, so here's another one of my headline, don't be so impressed by a cash offer. Yeah. Cause I would argue that a offer for a higher purchase price, maybe let's say three, fifteen or three, twenty, if you were listing for three, right? Yep. Yep. With no inspection and no appraisal contingency and maybe just a financing contingency is probably a stronger offer, right? Because as the buyer, you're saying, I'm still going to buy this house unless I can't get approved for financing for some crazy reason. Yes. It still leaves a little bit of protection and it leaves an out for the buyer, but it gives the seller, I'd say, a pretty decent amount of certainty that the purchase is going to go through and at a higher purchase price, which means they walk away with more money at the end of the day. Here's the other thing. If it was me personally, okay, great. I got this cash offer. In my re-raise under the umbrella of my poker metaphor, I would ask them, I want to say I would ask them to quadruple their earnest money deposit. maybe I get talked down to like tripling, but some amount, maybe this is a better fit with the poker metaphor with the re-raise, but it's like, wow, thank you for the offer for the, that is not contingent on financing a cash offer. Thank you for this earnest money. Show me that you're extra serious. Show me that you are ready to not just propose to me but you also want to get married that like you wrote oh a ten thousand dollar earnest money I'd like it to be thirty five thousand dollars and if you're if you're a serious cash buyer that shouldn't be a problem well exactly it kind of puts it back in their court like wow you're you're as strong as you say you are prove it prove it now right And from the buyer's perspective, if they really do follow through and buy the house, the earnest money amount within reason kind of doesn't matter because it's an advanced deposit and what they bring to closing anyways. Exactly. Earnest, it's just down payment. And if you're a true cash offer, it's a hundred percent down payment as Brian likes to say. And let me say it too, just as food for thought for potential buyers out there, even if your earnest money amount exceeds the amount that you actually plan to put down, that's still okay. You can get a refund back at closing of your earnest money if you choose to borrow more, right? Because we work with a lot of buyers where maybe we prove that they could do thirty percent down as part of the pre-approval because they have the money and that's a sign of strength. But maybe they want to keep money in their back pocket for a remodel or yes you know college loans you know college tuition for a kid or something they could still borrow yes ninety percent of the purchase price you know put ten percent down and if their earnest money was so high they'll get it refunded back at closing it's not super common but it's absolutely a possibility for a lot of folks so so when I said so one in my in my re-raise it'd be like a nominal go from like three hundred to like three oh three just to just to test them and then the second one triple quadruple quintuple their earnest money just to again test how serious you are my my other my two and a half uh remark tim was gonna be like and and by the way I'd like you to make a two thousand dollar donation to my charitable cause of choice. Because again- Now you're just torturing the buyer. Well, I know, but I'm trying to learn, do you think that you are doing me a favor? Are you a level-headed negotiating partner? I'm trying to learn about you and you as the buyer. This is David as the seller trying to learn about you as the buyer in my counter offer. I don't know anything about you. And, and as much as I might recognize the acunate mortgage, rock solid pre-approval that you wrote with your offer, the name of the agent, who's got a great reputation. If you, the buyer are a wild card, I don't know that yet. I'm trying to learn that you just walked through my house yesterday and I'm trying to learn, are you going to be tortured to get to the closing table or are you going to be mature? So that was my like, yeah, I need you to write a two thousand dollar check to Milwaukee diaper mission, you know, and promise to do so because I'm just trying to learn because I think about it in terms of my life. If my wife wanted a house. And I, of course, also wanted the house. And the seller was like, by the way, do this and you get the house. I'd be like, I'm driving the check. I just got in the car. I'm driving the donated check right now to whatever the address is, if that's what it takes to win this house, which I guess makes me a thirsty buyer. But it's like, that is a low, low, low bar. If the win- if they view a cash offer as almost like, Ooh, as the seller, if I take that, like I'm kind of almost giving up control of the transaction to a certain point, these two and a half tips that you just mentioned are ways to maybe level the playing field a little bit and still maintain our throughout the transaction a little bit because there are no other contingencies. So that's a perfect segue, Tim. So my other metaphor was, if I'm a seller, if I get a cash offer, it's like dating someone who is, they are an eleven and you are a five. They are way, way, way prettier than you. And right now the dynamic, I'm gonna say in and around Milwaukee, is it is a seller's market. That if you've got a house that's pretty nice, And you price it right, you're going to get a lot of foot traffic. You're going to get a lot of interest. You're probably going to have more than one offer to choose from. It feels nice to be the seller. Everybody wants me. They're telling me I'm awesome. I'm beautiful. Great. But if you're a very attractive five, if that even exists, and then a cash- LA five. What's that? An LA five is like a Milwaukee eight. Is that what the comparison is? Yeah, something like that. Adjust for inflation. So if you are feeling great about yourself as a seller, and then a cash offer eleven comes walking through, man, You feel great, kind of, because, wow, this person is interested in me? Yeah. Like, wow. They wrote me what number and it's cash? But it's that dynamic of like, you almost don't believe it. You're waiting for your very attractive XI buyer to eleven out of ten buyer to like break up with you because because you just can't convince yourself like, wow, why would they want me? I'm just I'm just a schmuck. And this person there with me and to your earlier point. If you're a seller, it suddenly can feel like you're not in control as much because this buyer just walked in and they're like, I'm beautiful, I'm I'm cash, I'm the best. And you as the seller are just like, wow, I never expected anybody like you to ever come through here. I'd be happy to say yes to you. It just doesn't feel good as a seller, I would imagine. I would say if it were me, I wouldn't feel particularly. Again, I would want to counter. I would want to be like, wow, I'm flattered. Yeah, I'm flattered that you want to be with me. So would that make it almost like a prenup? It's like, I would like to negotiate the terms of our relationship now a little bit more. In case we break up. Yeah. In case we break up. I'd be really curious on, you know, if agents are listening to this podcast, like give us a call or shoot us an email and let us know your thought on this, right? Because I mean, this concept is, I think, counter to the conventional wisdom that's out there right now. especially if you're an agent doing a lot of listing sides or seller sides let me know what you and your buyers think when you do get a cash offer and maybe you have six offers which is pretty it sounds like a lot but I think that's pretty common for high demand houses if not more yeah if you got six offers one of them's cash how do you lay out the pros and cons you know to your seller right and or or do you how do you counter do you counter at all do you just take a cash offer and just like like wow and then there's no pushback right and then you know does that generally in your opinion listing agent does that work out the best for your sellers at the end of the day because again like it's about uncertainty and about price at the end of the day and I have seen customers of mine win offers against cash offers where maybe something else was more desirable about the offer, right? Either the purchase price or a faster closing. Maybe they had a financing contingency, but waived all the other ones, you know? So I'm curious on like, from a listing agent's perspective, do they view the cash offer as just the slam dunk? You got to choose this one every single time or is there nuance to it? I would say I would almost, the other element too is, and particularly in a Wisconsin contract, if it were David, I would counter and I would strike David. any ability of the buyer to obtain financing in order to get to the closing table, to make it a true show up with a suitcase of cash. I don't see that. I don't see that very often at all. Because I suspect a lot of cash offers do obtain financing. Which is fine. That's, well... If it were me, I'd be like, oh, you want me to say yes to you, cash buyer? Well, I want to bifurcate who, I want to bifurcate the timeline of like, you can get, you can pay cash buy my house and then go and recoup your cash after the fact well or at least if you if you don't strike that verbiage in the contract at least what I think a smart listing agent would do if they receive a cash offer show me proof that you have the money show me a bank statement with maybe numbers redacted or something you know account numbers redacted but like Because otherwise it's not a cash offer. At least if they obtain financing, at least show me on day one that you truly don't need to, that you have a bank account with three hundred five thousand dollars sitting in there ready to rock and roll. That's truly a cash offer. Yeah, it's just, this is what I would do. Because you and I both have seen, we have literally helped clients who write a cash offer and then want to obtain financing, which it really depends upon the verbiage of the contract that you're using. I think... lots of cash buyers don't really want to use the cash. No. And if, but if it was me selling my house, I'd say, if you want me to say yes to you, be as strong as you are showing me that you are, that you are saying that you are. Sure. Cause the other thing, the, the, the, uh, moral of the story is don't try to buy David's house, ladies and gentlemen. No, Hey, for the right number, every house is for sale. Absolutely. But this is, I want sellers to be mindful that cash is not necessarily carte blanche. Yeah. Or it's just like seller, you know, sellers are in the driver's seat in this market. How do you want to make sure you stay in the driver's seat? once you accept an offer right because right to your scenario if you got a lot of foot traffic a lot of interest you're definitely in the driver's seat then do you want to continue to feel like you're in the driver's seat all the way until you get to the closing table and get the check So that's kind of why we're talking about this. This is why my metaphor, as I was thinking, as it was bouncing around in my head, I was like, wow, this, this eleven out of ten buyer, you know, wrote me a cash offer. Man, you you're kind of just hoping and waiting and praying that like, well, I hope she really does show up at the altar in thirty days because. if, if she doesn't, I had to say no to a lot of other people who also were ready to say yes to me or to, you know, to propose to me. It's like, could I have been happy? Could I have been happy with an eight? Yes. Right. But that's, but Tim, this is what we're talking about. It's, it's, I think cash buyers also have an expectation of discount and That may be a mortgaged, a financed buyer doesn't because they can't show that level of strength. Yeah. So they got to make up for it in other ways. Yeah. Well, an eight's got to try harder than an eleven. Isn't that what we're learning is like you can't just if you're a cash buyer, you can't you you think you can just sit back and be like, well, I'm an eleven. So like, yeah, you just walk in there and be like, I want that one. And then they give it to me because I'm awesome. Yeah. I mean, the dream is you get a great offer and they work hard or show that demonstrate. Well, which is why I, if it were me, I want to learn something about you. If you're an XI, but I hate your guts, like I don't care that you're an XI, but if you're an XI and you are mature and show, yes, I can actually show up to the closing table and with a suitcase full of money, exactly and that's the dream right it's then then I'm it's like I wish I could sell you three houses not just one right yeah the other thing that producer sue made note of too this this game that people are playing at least locally which is who is the cash actually coming from which is my my favorite like Well, I, David, am writing the offer, but let me show you Brian's bank statement. If I was the seller, I'd be like, you are out of your mind if you think that I'm going to take dad's or grandpa's account as substitute for your cash. Right. Because what if they decide not to give it to you? Right. Well, again, in the counter, you'd be like, oh, you'd like to use dad's cash as proof of funds? Great. Add him to the contract, please. Yep. And I'm going to re-raise you. Yeah. Right. Now, what if grandma thinks the house is ugly and isn't willing to pony up for the cash? It's like, oh, well, that's a problem. And in addition to all the things that I said before, just a small re-raise to learn something about you as a buyer, an increase in your earnest money to prove like, Are you ready? Are you ready to commit? Don't just give me a, don't be an eleven and give me a ring with no diamond. Give me a ring with a diamond on it, please. Let's quadruple the cost of this earnest money. Yeah. I think I've done an okay job feathering this metaphor without insulting people or getting myself canceled as soon as we put this up on the internet. I'm thinking of a lot of things that I'm not saying right now to extend the metaphor, but I think we'll just end it now. No, it's all good. All right. So those were my and again, Tim, like I tell this to our clients all the time. I know we are in a compromised position, but ultimately we know nobody actually wants a mortgage. What a what a buyer wants is the house. And we just have a tool called a mortgage to help you do that. But ultimately I always feel best when it's funny. I actually, this last week I was checking in with a client. It's been six months since she bought her house. She decided six months ago, she didn't want a mortgage. she was just going to pay cash. And for her financial situation, I was like, fine. Like, and I get it. Like what's my counter argument? Like, no, like I won't be able to afford avocados for my son. If you don't finance a small bit of this. It's the only thing it's like, I'd say we're even more in the advice business than the mortgage business anyways. So like me and you are never going to advise a client against their best interest because Just for the sake of making a quick buck. No, like that's not what we do. It doesn't work or it doesn't work long term. Well, that was six months ago. The reason she moved, she moved from the North Shore to West Suburb. Her grandson just turned three months, which is which I think the. bun was in the oven at the time that she was making the move it would have been yeah but science that's just math right there but uh that's the whole point like to just check in and be a human they're like my gosh, congratulations. Grandson's three months old. I hope that's going great. That's the real life thing that we're trying to help our clients do. And we'll figure out how to be in that client's orbit for many years to come. Because guess what? I bet when more grandkids, she's going to be like, I need more space if I need all these if I if I am going to host all these grandkids to come over, you know, for a sleepover in five years. Yeah. So it's just the real life stuff. All right. That is the blue button broadcast for today. I'll come up with more metaphors. I don't doubt it. Metaphors that walk the fine line where everybody knows exactly what we're talking about, but I won't get canceled. Tim, I promise I'm going to try to not get you canceled either. I will self-cancel before you cancel. But that's what I got. I am David. That is Tim. We will see you all next time on the Blue Button Broadcast. Goodbye for now.