The news media in general continues to call our market a buyer’s market which sets buyers’ expectations of the market totally wrong. I have spoken with a lot of potential buyers who are in a position of investing in a rental property who are frustrated with the process. They have made offers on multiple properties only to lose out to all cash investors.
I took a listing that was a probate sale last week and felt what transpired with that property tells the real story.
The home is a 1500+ sf, 4 bedrooms, 2 bath home which needs some TLC plus a new roof. The market data indicated that with a roof, the property should command about $110,000 but with the current roof was not lendable and the price would have to be discounted to attract an all cash buyer. The estate did not want to mess with the roof and agreed to list it at an as-is all-cash price of $85,000. The property went on the market on Thursday. By Friday I had one full-priced all-cash offer which one of the parties agreed to accept. However, the court appointed administrator was not available until Monday to ratify the contract. Come Monday, there were multiple all-cash offers with the highest being $91,000 from an investor with money coming from Hong Kong. By Tuesday, we had a total of 15 all-cash offers ranging from $60,000 to a new high of $103,000. The bank accounts presented as proof of funds ranged from low six figure balances to the highest being $18,000,000.!
We did not even entertain any offers that required financing. Needless to say, there were a lot of frustrated buyers and agents whose offers were not the chosen one.
In order to get an offer accepted in this market, cash is definitely king, but even that does not guarantee you success as illustrated here. It takes writing an exceptional and relevant offer. I call the listing agent to get a handle on what the seller is looking for with regards to terms and intangibles. Do they need a few extra days to get out or a fast close of escrow. It helps to work with an agent who has a known name and good reputation.
We have been very successful in helping our investor clients successfully negotiate for some outstanding opportunities. If you are thinking about investing, we would love to put our 43 years of experience to work for you and prove, “Experience is not expensive, it is priceless!
# posted by
Viki Benbow @ 3:01 PM
