Up to a few months ago, if you had cash,  your offer ruled the roost. It would most always be picked over conventional offers, and of course over FHA and VA. (City-funded loans aren't even on the radar anymore.)

But over the past few months, I've seen a shift  in which offers are being selected, and the results have left many cash buyers just scratching their heads in disbelief.

Of course it's cool to have cash- all of us would like that! Lowball offers went out 6 months ago, and now even cash offers have to be competitive. I just called on a home that was listed at $160K; they already had 23 offers, with cash offers starting at $175K, and had FHA and conventional offers up to $200K. Now for those folks getting a loan, appraisal can always be the fly in the ointment.  But smart cash buyers also want their investment to appraise, too.

I had two strong offers on a listing recently, and the bank chose the conventional over the cash, because it was $5000 more. They'd already lost their shirt on the default, so they wanted to recoup the most money possible.

So, if you're a cash buyer, you've got competition, from a slew of other cash buyers and very aggressive conventional buyers. Review the comps, and know that for more homes, they end up selling for fair market value. You've got to be in that range to win it. Go for it!

©2009 Barb Fischer San Diego 2009  Cash is No Longer King