Is CASH Always King? Are We Really in a Buyer's Market?

Sometimes my real estate stories can be tedious, I admit. However, they can illustrate a point. Most buyers believe we are in a strong buyer’s market and approach every deal with that in mind. That would be a mistake. Each deal is unique and your Realtor should help you do your homework.

As an example, in the last 30 days I assisted a young family with an offer on a
bank-owned property. Sometimes, the bank will invest money in cosmetic fix-up items and sometimes it won’t. In this case, the home was structurally fine but cosmetically a mess.

To make matters worse the water heater in the garage was leaking all over the floor. My clients were the first to make an offer to the bank. They wanted to know how much to offer and how long it would take to get a response. I informed them that even though the condition was rough, to say the least, the location and lot were very nice. In addition there was nothing else comparable on the market in that price range, so this property would create multiple offers - my best guess was that at least six to eight offers would be coming in. In addition the bank’s policy (very common) was to expose the home to the market place for at least 10 days before making a decision. My opinion on the price was that it was priced at
or slightly below market value.

What happened? Well, the number of written offers amounted to a dozen,
with more verbal offers that never made it to paper. Half of the offers were full price or more. The bank responded to the top two offers, asking for a “best and final” offer from both. My clients were also cash buyers so they won the bid even though they did not offer the highest price, although they did offer over
full price.

The point of the story is that even though we are generally in a buyer’s
market, you may find yourself in a seller’s market on individual properties. Standard equity sellers like cash but they like money more. Banks are no
different, but they are more inclined toward cash buyers because they don’t have to please an appraiser or make repairs in order to satisfy the all-powerful loan underwriter.

In this case cash was not King, but certainly “Royal.”