Dear Sue,
I have been trying to buy a property to fix and flip for more than six months.
Every good deal seems to have several competing buyers that continually out bid me.
My agent said that there’s a ton of first-time buyers in today’s market and I just need to be patient or change my investment strategy.
I don’t want to change my strategy and I find it hard to believe that there would be that many first-time buyers in the market.
Any ideas?
~ Investor Ida
Dear Ida,
Your agent is telling you the truth.
First-time homebuyers are taking advantage of the unprecedented combination of low real estate prices and low interest rates.
Housing has become so much more affordable over the last five years and interest rates are at 50- year lows.
It only makes sense that this kind of affordability would attract first-time buyers. In fact, the California Association of Realtors reported that the market share of first-time buyers was 38 percent in 2009 and has grown to 46 percent in 2010.
First-time buyers are catching on. They are no longer sitting on the sidelines watching all of the sales go by.
They have learned that distressed properties offer much deeper discounts than regular market sales. Interest in real estate owned or bank-owned properties has been primarily fueled by first-time buyers.
First-time buyers purchased 47 percent of the REOs that were sold in 2009 and 50 percent of those sold in 2010.
First-time buyers purchased 13 percent of the short sales in 2009 and 18 percent in 2010.
Not all first-time buyers require 100 percent financing. On average, first-time buyers in 2010 put 23.1 percent down.
The larger down payments have made their offers more competitive. Seventy-five percent of first-time buyers believe that their success was due to their agent’s strong negotiating skills.
First-time homebuyers have gained more business savy over the last couple of years. The quality of their offers has improved considerably and the offers are being made sooner.
Through the marvels of technology, homebuyers are being notified the instant a new listing hits the market. Their real estate agent wakes up to requests for showings.
I would take the advice that your Realtor has given you. Be patient and make your first offer your best offer.
As my assistant said, “write it like you mean it.”
It will be a matter of good Home $$$s and Sense.
Sue Thompson is owner and sales manager of HomeTown Realtors in Auburn. She can be reached at seesue@seehometown.com.
