Wednesday, December 12, 2012

First time buyers nudged out by cash offers.

From one of our commentaries complements of Rob Christman: On Saturday, just in time for Sunday's open houses, the commentary discussed how the first time home buyer had been left out of the recent excitement. Deb S., a top Realtor from California, wrote, "Unfortunately for our overall well-being, those purchasers were investors and first-time homebuyers cannot compete with cash. Period. So, they are scrambling like crazy and running from property to property and simply get beaten out (either due to the terms or they can't even make a decision as quickly as a number-oriented buyer can) every time. I am witnessing HOA being slow to react, with management not well-trained or asleep at that wheel, and they are not making any rules about what % of units must be owner occupied and the result is the complete makeover of many complexes into below 50% owner occupancy and thus, unable to get a loan. The homeowners aren't informed from the management, they have no idea who is buying, what the repercussions are, and they are suddenly in a home they cannot refinance and must sell at a substantially lower price when our market stabilizes and the investors slow down. I can't wait for prices to take a jump up so the market is in balance and homeowners can sell again with some equity and the buyers are a more balanced lot... OR maybe what really needs to happen is for rents to drop off their highs and those properties won't look as appealing. Nothing good came out of the Vegas buyout or the Arizona buyout and they are happening all over again - this time add Reno plus many, many more. And another note regarding Saturday's commentary came from Mike L. who wrote, "I have a comment on the "lack" of first time homebuyers that actually are buying homes. By my experience, it's not for the lack of them trying. I have pre-qualified a multitude of First Time Homebuyers and they are writing offers on homes. Typically they are using either FHA financing or Conventional financing with 5% to 10% down (some even with 20% down). However they are typically writing offers on lower priced "entry level" properties. These properties are also very attractive to investors, so we are getting constantly beat to the punch by investors using all cash or very large down payments. It's hard to blame the seller. Why wouldn't they take an "all cash, higher priced offer" over the lower down payment first time buyer? Some of my first time buyers have been trying for well over a year to have their offers accepted. Combine this with the lack of inventory. See us for more


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