What with the way things are in the housing market today, you’d be forgiven for thinking that you have all the time in the world to decide which property to buy.
But you would be wrong. It seems that the best homes in the most desirable areas are being snapped up all too quickly, and there’s a lot of competition for them. Investors with hard cash in their pockets are providing stiff competition to finance-chasing first-time buyers.
Take the case of Steve and Kim Duty, who recently lost out on their dream home in Denver, when a cash buyer topped their offer with a $400,000 straight cash bid. Having lost out once, they were forced to move much faster to secure the second home they were interested in.
It seems that buyers who are thinking they are going to get a fantastic bargain on their ideal home may be in for a nasty surprise if they are not careful, says 8z Real Estate president Lane Hornung.
“People have read all these reports about what a bad market it is, and so they come in with a low offer, maybe 10% or 20% below asking price,” he explains. “But they quickly find out that someone comes in and tops their offer, while the seller is still considering it. People need to move much faster, especially if the property is a nice one and going at a good price.”
This is true in many parts of the country, such as Washington DC, Texas, San Francisco and even hard-hit places like Phoenix, which is proving to be very attractive for smart investors.
Last May, 30% of all home sales went to cash buyers, an increase of 5% from a year before. Some real estate markets have seen even more cash buyers than the national average, with figures for places like Las Vegas (49%), Miami-Fort Lauderdale (63%) and Phoenix (44%) indicative of their attractiveness to investors.
Cash buyers are preferable for many sellers, because the deal is all the more certain to go through if the buyer doesn’t need to apply for credit. Making things worse for first-time buyers, the slowing down of the foreclosure process, with lenders delaying the sale of these homes, has meant that the inventory of properties for sale in some areas has whittled down. This means that the best ones that are available are often much sought after.
So be warned. If you find a home you really like and it’s going for a good price, move quickly or you may well be beaten to it.