But I'm An ALL CASH Buyer...Doesn't That Make Me King?
Cash is king...isn't it? Yes, it is...generally speaking. However, it doesn't necessarily apply to all real estate transactions and it is a common misconception among some all cash buyers who may be thinking of entering the real estate market. Investors who are actively buying real estate in Roseville, Rocklin, Lincoln, Loomis and Roseville, CA already know that simply being an all cash buyer doesn't necessarily mean you'll have access to securing any investment property you want at a bargain price. The truth is, there are many cash buyers out there and there is a lot of competition for properties that provide a good rate of return on your investment.
(Photo courtesy fiveinchpixie ~ flickr)
CASH IS KING IF...
...You want to buy property at trustee's sales. In California, you need to have cash in order to bid on properties being sold at the trustee sale auctions (unless prior arrangements are made).
...You are buying a condo in a complex that doesn't qualify for financing, but only if you're the only buyer making an offer. Remember, any other competing buyer will most likely have cash, as well.
...You are a buyer in a multiple offer situation and are offering the same price/terms as other buyers who are not all cash. When dealing with bank owned properties however, the outcome can sometimes be unpredictable.
BOB & LEILANI SOUZA
Real Estate Investment Specialists
Southwest Placer County, CA
Bob Souza - 925.513.3400 - bob@souzarealty.com
Leilani Souza - 916.408.5500 - leilani@souzarealty.com
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Bob and Leilani: Or, as happens here, it is an older home and the owners have done some work themselves without getting a permit or other problem so that the home won't qualify for a loan. Investors might not care if they just use it as a rental. It does have to be a steal of a deal.
Great information here, Leilani! That's what I try to tell my buyers and sellers as well but you said it perfectly!
Hi Bob and Leilani. OMG, this hits very close to home! I have a cash investor client that is the king of the low-ball offer! Sometimes he makes me nuts as I have written so many offers for him. However, I have managed to help him buy 4 properties in the last 2 years and we are waiting for a response on number 5.
He usually starts pretty low, but if we can stay in the game the all-cash offer has been a deal maker. He is buying condos, but not in troubled complexes.
I agree that cash is NOT king in all circumstances, and my client has come around to appreciate that fact. However, from his perspective, that's OK because he only wants it if it's a great deal. And he is seasoned enough to know that there will always be another opportunity tomorrow. The difficult part for me is how many offers do I need to write to make this work for both he and I??
"But I'm An ALL CASH Buyer...Doesn't That Make Me King?"
Not so much anymore here in Los Angeles & Ventura counties. A year or so ago, I would have said yes (actually I complained pretty regularly about it too). But this year, several areas are starting to stabilize and cash is not necessarily king anymore. Granted, you are spot on about trustee sales and condo complexes where cash is still king but other than that, the only other scenario where cash would be king are the run-down, dilapidated, dumps that are not eligible for traditional financing (of any kind).
Sometimes and maybe, but not always. Loved this post Leilani.
Leilani - So many cash buyers around here think they're "king" and if they're willing to pay market value they might be, but if they're not they most likely don't stand a chance.
Well, they get gutsy with their low-ball offers! A matter of fact WF accepted an ALL cash offer with 66k below listing and market price. I nearly fell over! In some cases it works.
Hella, I can see that in your lovely neck of the woods that scenario would apply. Thanks for sharing! :)
Leilani
Thanks, DeeDee! I appreciate you re-blogging this post. :)
Leilani
Marti, what a coincidence...I have the same type of buyer, too! What I really appreciate for clients like this is the ease of using electronic signatures when putting together offers. It makes life SO much easier! :)
Leilani
Donne, thanks for sharing input about your area and it seems to be similar to where Hella works, the Monterey Peninsula, where price and terms are king. :)
Leilani
Thanks, Anita! Glad you loved this post. :)
Leilani
Michelle, real estate is local so it's always best to consult with a local Realtor to be informed of market trends like yours where price exceeds cash in most situations. In areas like Las Vegas and Arizona where the percentage of cash buyers is very high, I'm pretty sure similar rules would apply. :)
Leilani
Lauren, I think $66k off the list price for a property in Aliso Viejo is probably somewhere in the single digit discount range, isn't it? South OC real estate is much too desirable to go too cheap! :)
Leilani