4/14/2011

How To OutBid the All Cash Buyer

The real estate markets in many areas, and not just in the United States, have much to be thankful for in the all-cash buyer. The all-cash transaction will be able to avoid a buyer's loan and appraisal requirements, in a market where appraisals alone have held up -- or killed -- some transactions completely. Appraisal issues, due to guideline changes, have eased up a little, but this does not lessen the desirability of the all-cash buyer in the eyes of the seller. This is especially true for "difficult" properties, such as major fixers, and condominiums in HOAs where the association may have other legal or financial challenges, including too many owners who haven't paid their monthly dues on time.
But it's a knife that can cut both ways. Some all cash buyers traditionally have believed that the seller will sell for a lower price in order to avoid a buyer's loan process. While that strategy may apply for certain cases, sellers are still just as concerned as ever about their net cash at closing. In a tougher market however, some sellers do prefer to get to a faster closing if they can accept the buyers terms. Buyers with loans who are attempting to compete with all-cash buyers should take a look at the percentages below, and also learn the specific neighborhood where they are likely to compete. The National Association of Realtors states that all-cash buyers made up 33% of all buyers in February, 2011. In 2010, the total was 59% nationally.

All Cash 1st Quarter 2011 Closings for Single Family Homes and Condominiums:
  • Long Beach (23%) - 155 Cash out of 665 Total:  $254,091 average price, up to $1,800,000.
  • Cerritos      (23%)  - 19 Cash out of  84 Total:     $382,210 average price, up to $990,000.
  • Seal Beach   (32%) - 8   Cash out of 25 Total:      $440,706 average, up to $800,000 .
  • Lakewood   (9.59%) -  17 Cash out of 163 Total:  $330,173 average, up to $500,000.
  • Huntington Beach (20%) - 69 Cash out of  344 Total:  $452,409 average, up to $1,500,000. 
Therefore, buyers need to prove their strength to the seller, because if your seller has a lot of equity in their property, they are less likely to be interested in a "low-ball" cash offer.

Before shopping for a new home, go to a recognized lender and get completely pre-approved, by allowing your credit to be run and submit all requested to documentation to the loan officer.
Learn what the list-to-sell percentage is in your neighborhood of interest so that you can make a good offer that applies to the true value of the home.
Submit your lender's pre-approval letter and contact information with your offer.
Write in a strong deposit amount, at least 2% or higher, with your offier--this shows your commitment to the seller.
Understand the terms and conditions which may be associated with a short sale or and REO property: they are not the same negotiating experience as with an equity seller.
Be prepared to act quickly--you may not have days to decide if you want the property or not.
Have the patience and fortitude to keep looking if you lose an offer in the beginning, but asking some questions up front through your agent may help to avoid the worst calamities, and may help you find out what's important to the seller. If you can be flexible, your chances may improve.

And also remember, sometimes the cash deals fall apart also.


Bookmark and Share

No comments:

LinkWithin

Related Posts Plugin for WordPress, Blogger...
Web Statistics