California First Time Homebuyers Are Competing With Cash Offers

 

 

More and more California first time home buyers are competing with cash offers. Cash offers to buy California in 2012 broke an all time record according to Realty Trac statistics.  This means that California first time homebuyers have to be more patient than ever.

But who really wins here?  Cash offers can be 5-20% less than California first time homebuyer offers.  Real estate agents may make a quick commission, and if the property is lender owned, the lender moves a non income earning asset off their books, but how is this helping homebuyer families and the refinance market?  The answer is that it’s not helping them.

The home sells for less on a cash offer, agents make less commission, a homebuyer loses out on an opportunity to buy a home for their family and refinance loans fall apart because of a home selling for less which brings down the value of their comparable home.  If the cash buyer fixes up the home, can the refinance consumer try to refi again once the house sells?  Sure, but now they have to pay for another appraisal, and wait for the home to resell and quite possibly miss out on historic low interest rates.

Cash is king.  California first time home buyers are competing with cash offers. California first time homebuyers just need to persevere and hopefully more inventory will hit the market in the spring 2013 market. Also Foreclosure sales are at the lowest point in 5 years right now, so hopefully more sellers will give families a shot at buying a home instead of taking the low ball cash offer and give them a chance at earning the American dream.

Best,

Kevin Walton

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