It just happened again. The cash buyer is astounded that the bank did not fall all over their all cash offer even if it was a low ball. Cash, after all, has to be King during this time when lenders are only lending money because the Federal Government is forcing them. Has anyone loan business lately with Bank of America? This time last year I was closing two deals they were doing the loan on and they were both more than a month late. Every time the underwriter had bothered to look at the file they had come up with yet another hoop for the buyer to jump through. One of the buyer's had rented out their home in one of Chicago's better suburbs and had the audacity not to have a separate check book just for that one property. Even worse, when the heater had needed a $1,000.00 worth of work she had let her tenants pay for it and take it off the rent. If the underwriter's actions were to be believed, that poor buyer should have been taken out and shot. How dare she or anyone else not think at all times about keeping their finances like they had a masters degree in finance and business so no underwriter or bank managers ever have their tennis or polo game time cut into.
In this lending climate I can not tell you cash transactions are easier. Over a third of my business in the last two years has been all cash. I love it. No bank to please. No appraiser to have a nervous break down that there are not three mirror sold comps within a block that have closed escrow for more in the last month for a higher price. Often the homes an other properties I see are one of a kind or are the type that are rarely on the market. Has anyone out there tried lately to get a 80 to a 100 year old beautifully redone California Craftsman appraised lately. These homes in great condition are hard to find. Two years ago I had took a buyer all over Los Angeles County for six months until one finally came up for sale in a nice area of San Pedro. That adventure is another blog for another day.
My last all cash buyer was an eighty year old lady from the Westside of Los Angeles. I am probably stretching it to call her my buyer. I do not know at this point if she has even bought. Evelyn (not her real name of course) has until the end of this year to complete an exchange. Two years back some school district bought a property she owned for $400,000.00. When eminent domain is used the IRS and state tax authorities often give the buyer two years to re-invest.
You would think that the significant drop in the property values in the last two years would in itself excite Evelyn. Be real. At this time Evelyn has been out with me three times and has been disappointed by what she has seen. First she wanted commercial or income property that was already leased out so she would not have to do it. After showing her several properties that fit her criteria up to $600,000.00 only to see her frown I started questioning her. After an hour of vague answers I was finally able to conclude that the property she was exchanging out of was a three unit building she had bought in 1994 for 5x gross. It had been in an area where there were no bars on the windows. Some of the properties I was showing her did have bars on the windows and were in rent control and were still selling for no less that 8x gross if it was a building that needed work. A fully rented building was going for rarely less that 10x gross. That or the buildings were bank owned and she would have to rent them out. Apparently Evelyn had assumed that with all the bad publicity in the papers about everything being in foreclosure that she would easily find a four plex in Redondo or Hermosa Beach in her price range that had a hundred grand or more a year income.
One of the great things about the phone is you can always find an excuse to get off. If I had not I would have told Evelyn if there were such a property out there she and everyone else out there would have to battle to the death over it with me. Deals like that are one in a lifetime and even when I was a virgin I would have died before I admitted it. After waiting a few days I call Evelyn back and explained that even with the recession, there are still lots of well healed people like herself that have lost in the stock market and are getting laughable interest on their money from the banks. The one thing no one expected in this economic crash is that there would be lots of cash going into real estate that would keep the values from falling to the point that the banks have to give property away or tear it down. At least that was the case in Los Angeles and the along the Southern California coast.
Evelyn is now not returning my phone calls. On the rare occation she has answered the phone she has gotten off really quick. This for a lady who never failed to keep me on the phone for at least an hour. She is not sure what she is going to do. There seem to be no single family homes along the beach for $400,000.00 that you can build ten units on.
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