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Hundreds of potential home buyers were furious earlier this month when a millionaire yacht dealer swept up 650 tax foreclosed homes at an auction in Detroit. To be honest, they never stood a chance.
Real estate investors are enemy No. 1 to potential homebuyers these days. Willing to pay in cash upfront and take just about any property on the market if they think it’ll turn a profit later, these guys are near impossible to beat.
“I always tell buyers they’re not gonna play with these boys,” says Zillow.com real estate expert Brendon DeSimone. “It’s the big leagues. They’re men with cashier’s checks and they’re fighting for these homes. They treat them like stock, like candy.”
He recalls one investor who was determined enough to break into a foreclosed home for his own inspection before snatching it off the market. Investors of his kind flock to areas with high foreclosure rates like Arizona, Nevada, and Florida and swarm like vultures, picking up properties as casually as the morning paper.
“You can’t [compete] unless you have cash,” DeSimone says. Since that’s not exactly the easiest options for many homebuyers (especially first-timers), your best shot is steering clear of auctions, where investors are sure to dominate, and sticking to residential listings.
If you can swing it, offer to make a cash deposit, or hope that the other buyers offering cash will try to low-ball the seller.
“Cash is king but not in every single scenario,” he says. “A cash buyer may offer 5 per cent under [the asking price], but if somebody with a loan comes offering the asking price, the owner may take the risk.”