A Feeding Frenzy Between Cash Investors and First-Time Home Buyers?

[Corey Dutton]

In the 4th quarter of 2011, I’ll bet you can guess which States had the highest percentage of foreclosure sales. Ok, now close your eyes and guess. Ok, now open your eyes and keep reading to see if you’re right…

Surprise, surprise. Nevada had 56%, California had 43%, and Georgia had 39%, of all sales of foreclosed homes during the fourth quarter of 2011. But there is intense competition for these foreclosure sales in most market areas. This competition is occurring between cash investors and first-time buyers, with reports of multiple bidding on discounted foreclosures becoming the norm.

Some agents are reporting multiple offers, and over-priced offers on their foreclosure sales. I posted a topic recently asking 'What Are Real Estate Values Doing in Your Area?' I had a ton of responses but everyone said the same thing, "multiple offers, over-priced offers..."

It seems there's some competition between real estate investors and first-time home buyers to scoop up this foreclosure inventory.

Any comments on this topic?

[Chris Clothier]

We are not seeing a lot of competition from first time home buyers here on the properties we want and I believe that is the case from lack of mobility on the parts of many buyers who are choosing to stay put rather than buy and a lack of faith on the parts of many sellers in the banking system. Cash offers simply take the day when it comes to competing with an offer that is reliant on a bank for closing. We are repeatedly told that ours is not the highest bid, but by far the strongest contract.