On May 8, 2014, the real estate news sources, Inman News
posted an article
on their website an article stating all-cash home sales reached their highest
levels in the last 3 years for the first quarter. Most people assume it was
institutional investors constituting a large portion of these purchases. In
reality, they made up a relatively small portion of these transactions. Across
the state of Colorado in places like Littleton, Aurora, Westminster, and Denver, the majority
was made up of individual investors, second-home purchases and traditional
owner occupants. With more cash buyers out there than ever before, transactions
without lenders or mortgages are becoming more prevalent. Does this mean ‘Cash
is King’? Well yes and no…
It’s all cash at the closing table
The biggest mistake cash buyers make is they think that
because they don’t need a loan that they are in the driver’s seat in
negotiations. A cash buyer may have a fraction more power than a buyer who
needs a loan, but with inventory levels still drastically lower than they
should be, a cash offer can only take you so far. All too often in this market,
cash buyers think they can throw out lowball offers. In all actuality, a
lowball offer in this market hardly gets a look before it gets tossed in the
trash. Loan or no loan, its all cash at the closing table.
Don’t let your cash get too picky
Another interesting phenomenon with cash buyers is that they
can be some of the most picky buyers when it comes to inspection issues. Of
course, this is not a blanket statement of all cash buyers but sometimes these
buyers can think their large bank statement gives them the right to demand
perfection. In a market where we are seeing many properties receiving multiple
offers, sellers are likely to move on to the next offer if a buyer gets too
picky with their inspection items.
Know when to hold ‘em…
At the end of the day, the buyers that succeed in this
market, cash or otherwise, understand the circumstances of the market, of the
specific property and where the power lies between the parties. We are seeing
in many instances that cash will sway a seller when looking at too similar
properties but when there two offers and the cash offer is significantly less
than the non-cash offer, most sellers are more willing to roll the dice,
especially if the buyer needing the mortgage is well qualified. Savvy buyers understand
having all the information before entering the ring is crucial. This is why
working with a Realtor who is an expert in the market is invaluable. Not sure
where you stand? Call me today and we can discuss these issues together!
Curious what your home is
worth? Use our FREE online valuation tool Click Here!
Matthew Koller is part of the Carr Peck & Associates at Keller Williams.
Carr Peck & Associates have been recognized locally and nationally as
experts in real estate. Locally, they are Realtor Roundtable Recipients with
Denver Metro Association of Realtors. Nationally, they have been recognized by
the Wall Street Journal and Real Trends as one of the top selling agents in
Recognized as a top selling team in Denver Metro area. Nationally recognized for homes sold by the Wall Street Journal, Real Trends and Top 5 agent by RIS Media. Our goal is simple and that is to exceed our client's expectations by providing professional service, expert advice and exceptional results.
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"We worked with Karen Venier for a relatively short time for a good reason: our home sold at full price within hours of hitting the market! While it’s true that the Denver housing market is “hot,” credit for the speed and ease of our transaction belongs to Karen. She was great to work with, giving us perfect advice about readying our home for sale and then expertly guiding us from offer to close. Along the way, we came to appreciate Karen for her skillful blend of professionalism and personal touches – like dropping off our favorite beverages during a particularly stressful time in our move or shoveling our driveway in subzero temps after we’d left the state (way beyond the call of duty!). Now that we’ve relocated to Wisconsin, we keep saying that we wish Karen could be our buyer’s agent here. Since that’s not possible, we’ll shout her name loudly to whoever might be looking for a home in the Denver area.
Thanks for the great work, Karen!