Hal's Mortgage Blog

Sure, especially if you have lots of cash.

Over the past several months I have qualified quite a few buyers who went out with their Realtor shopping for a home, expecting to get a great buy on a foreclosure. They made offers on properties only to lose out to investors who are cash buyers.

 
Many first time homebuyers are short on cash and need the seller to pay for some or all of the closing costs. This is the same as asking the seller to “discount” or take less for the property. In the case of bank owned foreclosures they may have already priced it at their bottom dollar.

 
Sellers like cash sales because they don’t have to worry about an appraisal and they can close the deal quicker. All-cash sales appear to be between 20 - 30% of resales recently especially in the lower end, entry level homes. I personally have never seen this many cash buyers.

 
What can you do to boost your chances of getting an offer accepted? 

1. Expect to pay full listing price or more if you need closing costs paid by the seller.
2. Come up with a larger down payment.
3. Look for HUD foreclosures. Investors are excluded from new listings for the initial offering stage.
4. Work with a Realtor who has a list of recent foreclosures being prepared for sale. That way you can get a jump on the competition.
5. Write a letter to the seller, to be presented with the offer, explaining why they should sell to you. It can’t hurt and it may help when there are multiple offers.