Real Estate Blog - FIRST TIME HOME BUYERS COMPETING WITH INVESTMENT BUYERS IN PRINCE WILLIAM COUNTY, VIRGINIA

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FIRST TIME HOME BUYERS COMPETING WITH INVESTMENT BUYERS IN PRINCE WILLIAM COUNTY, VIRGINIA

FIRST TIME HOME BUYERS IN PRINCE WILLIAM COUNTY ARE HAVING A HARD TIME COMPETING WITH CASH INVESTMENT BUYERS.

In June 2005, there were 5 homes sold to CASH investment buyers.
In June 2008, there were 116 homes sold to CASH investment buyers.

CASH vs. FHA? Because of the low down payment for FHA financing, 3.5%, most owner occupant buyers are financing with FHA insured loans. However, they are having a hard time competing with CASH buyers who buy homes with no inspections, no contingencies and quick settlement. The bank owned properties are particularly attractive to both first time home buyers and investment buyers. However, the banks are selling to investment buyers even at prices lower than contract offers from other buyers. CASH IS KING!! However, most investor buyers are looking for bank owned properties in the $200,000 price range and these homes often need extensive repairs and upgrading. Investors are buying to rehab and rent or hold and then resell.

MORTGAGE FINANCING HAS CHANGED IN THE PAST FEW YEARS.

Prince William County	Jun-09	Jun-06
Conventional	174	620
FHA	255	6
VA	118	20
Assumption	28	72
Cash	116	5
Other	10	8

Home in Woodbridge VA

VA Buyers

Prince William County Virginia homes are also popular with military home buyers stationed at Ft. Belvoir and the Pentagon. VA financing is accepted throughout Northern Virgina, especially near military bases.

This home is the typical style available to home buyers in Woodbridge / Dale City in the $300,000 price range.

INVESTORS ARE BUYING BANK OWNED HOMES in PRINCE WILLIAM COUNTY WITH CASH. However, short sale listings offer good opportunities for home buyers using FHA and VA financing. Our agents are experienced managing short sale contracts for residential home buyers.

TIME IS RUNNING SHORT FOR THE $8,000 TAX CREDIT. In order to qualify for the First Time Home Buyer Tax Credit of $8,000, the contract must close November 30, 2009 or earlier.

PRINCE WILLIAM COUNTY VIRGINIA MAP

Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988, E-mail.

SEARCH LISTINGS in Prince William County, Virginia and you can view all active listings offered for sale in the Homesdatabase.com site. Homesdatabase works like the Multiple List System, MLS, works for real estate agents. You can search by location, price, features, style, lot size and more. Enjoy and when you find the homes you'd like to tour, contact us. You can also enter your information for daily updates.

Posted by Lenn Harley, Real Estate Broker, Maryland & Virginia on 07/14/2009 03:19 PM

Comments (24)

Prince William County VA Homes in the Regional (Localism) Channel

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Originally posted at: MD, VA Foreclosures, First Time Buyers Grants, CDA Loans MD, Rehab Loans MD & VA: FIRST TIME HOME BUYERS COMPETING WITH INVESTMENT BUYERS IN PRINCE WILLIAM COUNTY, VIRGINIA

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24 Comments on FIRST TIME HOME BUYERS COMPETING WITH INVESTMENT BUYERS IN PRINCE WILLIAM COUNTY, VIRGINIA

JUL

Hi Lenn,

It's a difficult market for the first timers. If you have to compete with a mountain of money to get a great home, no inspections, and no waiting on loans to fund. The seller is going to take the Cash buyer everrytime. :(

-Lisa

Lisa. And they do, over and over. Our agents work hard, but some times the buyer doesn't understand they they've got to compete.

Len - We have the same thing going on here. The advise to my buyers is to put "bullets" in the gun if going for a great foreclosure and be prepared to shoot. Big game hunters are rampant in this market. I had a similar post today on this...with a little tamer wording. Great post and very true

Claude. I read your post. Very good.

Buyers just have to understand the market. Clearly, few do. They read in the newspapers that bank foreclosures are cheap and they can't think beyond that because they don't understand the dynamics of list/offer/contract/appraisal.

Fact is, it's the cash buyer that has the edge.

Wow that is a lot of cash flowing through the market.We have seen the cash investors but they are not seeing the buyers in return. SO some are having to convert to renters.

Not only are cash buyers preferred by the banks, REO properties in this price range are better investments for cash investors at today's prices than they were in 2005.

Charles. Same here. Because the investors need to sell to a lot of FHA buyers, they have to age the home after buying it and rehab. They often rent.

Brian. These REO homes are an excellent buy. I'm often surprised at the value.

Yep, Cash is King Lenn,

At least it was for my client. I just completed one of those REO's with 38 offers. 12 were cash buyers went well into overbid and luckily for my client, we made a case for a lower amount ( after our overbid offer was accepted) based on an amazing inspection and detailed request and we were successful getting a lower than list price. My client thinks I did an amazing job and truth be told, we were just lucky. I suggested to the investor client not to count on that happening again. I undertsand that of the 24 conventional offers, allmost all were bid well over asking. We ended up well below asking. Who'd a thunk it? :-)

Those are startling stats Lenn. Where would you stick your nest egg?

Make each day a great day!

LENN- I see it here all the time. It is really frustrating for the first time home owners facing the deadline on the tax credit.

Lenn, these are really interesting numbers. What worries me is that investors where part of the problem and I'm not sure they are a solution. I get worried when I see high numbers of non-owner occupied homes in one community. But, with loans so hard to work with, I truly appreciate my cash buyers!

Lenn - similar issues here. I haven't done the stats (but should) but there are many more cash buyers now. And since some complexes will not qualify for FHA some buyers are having a tough time competing in the lower price ranges.

Jeff

Lenn - I understand the process as I've purchased for quick cash with no inspection and no contingencies in the past. First-time buyers are at a disadvantage, but those who have the guidance of a good professional, such as yourself, can usually find a deal that works.

Hi Lenn

It surprising that there are so few FHA sales.

Good luck and success.

Lou Ludwig

It is a process we have to go through as the prices start to increase we will see the cash investors back off and the traditional buyers will not have to compete with them.

Hi Lenn! Most of our REO listings will not even consider an FHA/VA on their listings. It really puts the first time buyer at a real disadvantage in their search for homes. However, our FHA/VA sales are doing very well, as it is a perfect loan for first and second buyers. Down the road 8-10 years, they will be glad they have a assumable loan then as a seller. Most likely interest will be much higher and even though the new buyer will need to qualify for that FHA/VA loan it will be very attractive, as it was in the mid 1980's. Buyers need to think above the list price for many homes that are REO owned that will accept a FHA/VA offer, as they usually are priced extremely well to begin with! Your stats chart clearly shows your market loans very well. Great post.

JUL

Chances that the $8000 credit will be extended: Excellent, if we all call our members of congress.

Chances of another housing decline if it's not: 100%.

Only the bottom strata of the market is perking here. The only reason for that: the $8000 credit.

Lenn,

Jeez; you're system of doing real estate is a hell of lot more complicated than ours. Every day I learn more terms.

William. I get reports from agents in my network that they are often in similar situations, with multiple offers, 15-20 or more. Insane.

Since our buyers are not investor buyers, they are usually FHA or VA buyers and, unless it's their 3rd, 5th, etc., offer, they are still in the learning process and not ready to compete.

TOTOH, we often get the contract with our "highest and best" because our contracts are in very, very good condition and the listing agents/banks know that the buyer will get to settlement.

Paul. It is amazing isn't it. The turn around in financing types.

Diane. I don't know that investor buyers were part of the problem in this area. The true investor buyer is one who is savvy and understands the market. One of the problems that contributed to the mortgage mess is the AMATEUR investor, the consumer who wanted to get on the gravy train and thought they were smart enough to invest in addition to their residential home real estate. They defaulted in huge numbers when their ARMs reset and their properties didn't appreciate. But, that was a very small number.

The true investment buyer is helpful because they buy poorly maintained properties for rehab.

Jeff. The problem with condos and FHA is a growing problem and HUD appears to be on a quest to make every condo in the country worthless.

John. I'm laughing out loud because I agree completely. I have never had a home inspection on any property that I've ever purchased because I preferred to do a quick settlement at a very good price. Many sellers are very afraid of home inspection and will go with an offer with no inspections at much lower prices than a contract full of contingencies.

Lou. There are a lot and growing number.

Terry. Indeed. I believe that investor buyers serve a very good purpose to stabilize the market.

Dona. Thanks. Most of our low priced buyers are FHA because of the low down payment requirement. They are at a disadvantage with cash buyers, but so be it. We don't have much of an assumable market, cash is hard to come buy in this area because of the high cost of living, transportation, housing, etc.

However, the assumability of the FHA/VA loan is always an asset and, if prices stay low, which I expect for many years, may be a real help to sellers since it won't take so much cash to buy.

Jim. Indeed. Every time I see a government program, I always see the limits standing out, which in the case of the $8,000 program are the income limits and the first time buyer limit. Why, why, why???

Terry. What's so complicated??????????

Great post Lenn. . right to the point. I believe short sales have a bad reputation that keeps first time home buyers for consideration and it attracts mostly investors.

By the way. .thank you for the referral and thank you for taking the time to contact me.

Fernando.

Short sales offer opportunities for residential home buyers. Sadly, the banks, in their zeal to control, kill many that could be sold.

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