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.
But guess who
probably just bought the home you had so fallen in love with? Yep, BOMAD.
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.
