Categorized | Investing

Investors Buying Up Properties in the Bay Area

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Across the country, many potential homebuyers have reported challenges with respect to mortgage loan approval standards. Buyers in the Bay Area are now facing a different challenge, as many potential homeowners are being either outbid or undercut by absent investors. In fact, twenty percent of buyers in the last month alone were investors seeking rentals or potential re-sale properties. The majority of these sales were paid for in cash, which is preferred by many banks in this tumultuous time period.

While the growth in sales certainly is positive news for realtors and lenders, many potential homeowners are growing highly discouraged after losing out on the purchase of an ideal home at the last minute to a cash-paying investor. Many investors in the Bay Area have started looking into the purchase of low-end properties between two hundred and four hundred thousand dollars with the intentions of either converting the home into a rental property, or performing such renovations, and then selling the home for a profit.

Many of these investors are able to win out on the purchase of a home over traditional first-time buyers, or those looking for an upgrade, because they are opting to pay in cash. Even if the cash offer is for less than the first-time homebuyer’s financed offer, many sellers and banks are choosing the cash deal. In general, cash sales are finalized faster, and offer far less risk to banks than a sale involving a mortgage loan.

While first-time homebuyers struggle as they compete against cash-paying investors, analysts believe that many of the investors are helping to take the low-priced foreclosures off the market, and thus, providing a spark to the real estate industry.

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About Drew Wilson

Drew focuses on the Commercial and Mortgage/Finance categories.

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