In the past two weeks, I have written financed offers on properties that were $9k, $10k and $14k over list price. Three incredible offers submitted, all rejected outright.
Why? In each of these cases, it’s because the Bank of Mom and Dad beat us to the punch.
What is the Bank of Mom and Dad? In a market where sellers love cash offers (as I documented here earlier in the week), the Bank of Mom and Dad comes into play when a buyer’s parents step up and purchase a home outright for their son or daughter, who then doubles back and refinances it after closing in order to put the cash (less their down payment) back into the pockets of Mom and Dad.
Can everyone go the Bank of Mom and Dad? Of course not. In fact, only a small minority of buyers overall have the ability to play this card, because only a small number of parents are willing (or able) to serve up $200k, $300k or more on demand.
Is the Bank of Mom and Dad unfair? Sure. So is life.
But the fact is in a market where multiple offers on everything is now pretty much the norm, those powered by the finances of Mom and Dad are winning. And having the ability to buy a home in 15 days (or less), as is, with no appraisal and no underwriting, is going to win out every single time.
If you've been out writing offers and have found yourself inexplicably losing time after time, you might want to set aside a few minutes this weekend to call dear old Mom and Dad, wherever they may be, and reconnect. Because cash is king right now in Denver real estate, and for many buyers, the Bank of Mom and Dad is the competitive advantage that is setting them apart from everyone else.