According to Mercury News reporter Pete Carey, during June 2011 close to 60% of residential transactions in Silicon Valley were Cash buyers! This jives with our own experience where we are writing more offers for Cash buyers than Contingent offers (buyers w loans). So, the question to ponder is how can we help our contingent buyers compete with Cash Buyers in the market. Here are some suggestions:
1) Know as much about the seller as possible. If this is a Bank Owned (REO) property, find out if the selling bank has any seasoning requirements on cash purchases. Some sellers now have deed restrictions on flips, so if a cash offer was selected, don’t give up. It does NOT mean that the buyer will proceed with the close due to deed and flip restrictions.
2) Write a clean offer. Granted your clients will have appraisal and loan contingencies, but if the loan is from a direct lender and you are comfortable with their pre-approal and underwriting guidelines; then it might be a calculated risk now to require a loan contingency on your offer.
3) Build a relationship with the seller’s agent. Ask them to take your offer as a backup. Or if they don’t have such an option, offer them a chance to notify you if the cash buyer backs out.
4) Research the property and develop a through understanding of your buyers plans for the property.
Finally, educate your buyers that this is a marathon and not a sprint to finish. Those who are patient, will do much better than those who are rushing to get into the 1st property they fall in love with.