This was in my e mails today from an all cash buyer and I am sure like many RE agents you have also faced this same scenario. It goes like this......
"Is there any one who wants to sell for cash? Please advise regarding good deals. Bank owned preferred. Over 20K lot. Under 275K. Motivated sellers only."
My response is thus.....
Dear Mr. All Cash Buyer,
The Banks are holding tight on comparable market values and will kick out an all cash deal if less than a financed offer. The best deals for cash are homes that cannot be financed because of faults. Like the kitchen was torn out or the house is unfinished. The banks are looking at the bottom line, how much they can recoup. If they have to wait for a financed offer at or above their asking price they will. Cash deals can do well with a Short Sale that has been approved and the buyer has walked and the bank will force a trust deed sale if a cash buyer that can close in less than 30 days. As I am sure you are aware most all the Bank Owns and Short Sales are the result of bad loans with high interest rates and 100% financing. These notes were then sold on the secondary stock market to foreign investors. The defaulted mortgages are not held by the by the banks but are being serviced by the banks. So the banks are not as desperate as the media would have you believe. They get paid for negotiating the sale. If it takes a longer amount of time to sell they make more money, so they do not feel a need to sell quickly at a greater loss than market value. The influx of a vast amounts of sales information in a geographical target market and supplied data as to the sale of homes has provided a platform basis for home values that is easily accessible to the banks servicing the sales of homes.
All homes sales in this area are 30-37% less than what they sold for in the Real Estate bubble in 2003-2006. The majority of the sales I have represented in the past year have been "all cash" deals. Like you the buyers where under the impression that because they are all cash buyers their offers would have priority over a financed offer. The truth became obvious after 5 or 6 rejected low ball offers that the bank owned homes would only acceptt offers with the highest bottom line. And if that meant they had to wait two weeks longer for escrow to close, they did. The biggest advantage an all cash offer has is that it can close escrow quicker than a financed offer. Financed offers need a minimum of 30 days to validate the buyers financial qualifications, appraise the purchase, and then fund the loan. We are still in a multiple offer situation especially on highly desirable homes. If a financed offer and an all cash are the same price at market value the counter offer to the all cash offer can be 1. The appraisal contingency be removed 2. Close in 20 days or less 3. Home is sold "as is" with no repairs to be paid for by the sellers.
So with that being said I my question to you is what is a "good deal" to you? A home for less than market value? Offering $150,000 for a home that is listed on the MLS for $200,000 and getting it? I am not seeing that happen in this market. Cash maybe king but today it comes with contingencies, as mentioned. My thought is they are all great deals because of the drop to real values for today's market. The prices paid in the bubble where not real values but over inflated prices because anyone with a pulse could qualify for a loan with 100% financing. That was not a real market, what we have today are real prices stabilized by equatable sales of like properties. I see homes listed below market values and most always they are priced this way as a desperate attempt to secure an offer to stop a trust deed sale, more times that not by the time the banks servicing the Short Sale will counter the offer at market value, and the buyer walks, and the home goes through the sale. I have seen a few sell a few thousand dollars below market value but the buyer has had to wait months to close the deal.
Sorry to be so long winded but I think the truth about today's market is pretty much black and white. All cash is not a magic bullet that will win a home sale at below the current market value. I see this day in and day out. The biggest misnomer is when the media touts that home prices are falling again they are generalized lumped together nation wide statistics. There is no way you can come home values in Southern California to prices in Missouri. This a a apple and orange scenario. Home sales and values in Missouri cannot be equated to home values in California. Orange County California for an example is still with in the same values during the bubble. Temecula Murrieta is located in Riverside County and was the fastest growing county in the nation for three years. Home building was at it's peak, but was also financed with high interest adjustable rate mortgages, hence we have a higher that normal amount of distressed home sales today.
I would be honored to help you find a home, I just need a little more information from you as to wether you intend on living in the home or is it for investment purposes? Also I will need a bank statement current within the last 30 days to submit with your offer as "Proof Of Funds" this is required now with all offers or a loan approval letter from a direct lender. I am afraid the banks or sellers now require all offers to be validated as to the buyers ability to close the deal. Best Always, Tere Rice
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