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Old 02-03-2014, 02:04 PM
 
Location: Pasadena, CA
363 posts, read 375,335 times
Reputation: 400

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We all know that cash is king. We have over 20% down, a pre-approved mortgage, good credit and low debt to income, but like a lot of buyers, we keep having our offers rejected in favor of cash buyers. I can't say I blame the sellers, but I'm curious, where is all this cash coming from?
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Old 02-03-2014, 02:08 PM
 
1,317 posts, read 1,625,602 times
Reputation: 645
Overseas
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Old 02-03-2014, 02:09 PM
 
634 posts, read 710,986 times
Reputation: 798
Stock market.
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Old 02-03-2014, 02:17 PM
 
Location: Los Angeles (Native)
21,101 posts, read 12,329,671 times
Reputation: 9976
There actually is a lot of money out there. Definitely overseas is a big one , but there are also people in U.S with money or equity.

Also there might still be flippers out there. I'm also guessing many of these people will do a cash out refinance down the line if they are buying with straight cash to get a deal.
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Old 02-03-2014, 02:36 PM
 
223 posts, read 350,365 times
Reputation: 185
Wall street funds (big pools of money), small-time investors and flippers, and money from overseas.

Go read drhousingbubble.com. It is specific to CA real estate and explains it all. Basically, you'll never live in an affluent area in LA unless you have two big incomes in the home.
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Old 02-03-2014, 02:48 PM
 
Location: Los Angeles
187 posts, read 243,809 times
Reputation: 84
overseas and old/oldish money
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Old 02-03-2014, 02:49 PM
 
Location: South Bay
7,077 posts, read 18,070,978 times
Reputation: 3296
i think many of the all cash buyers are investment groups. think a family or group of 5+ investors pool their money and buy a house and have it flipped. they will then roll their earnings into the next property(ies) and repeat.
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Old 02-03-2014, 03:38 PM
 
Location: Los Angeles (Native)
21,101 posts, read 12,329,671 times
Reputation: 9976
There was a lot of this from 2009-2012...but it seems to have slowed down a bit. Although I'm sure it's happening.

Less "deals" on the market .

An idea nowadays might be to do some research and buy the way many investors do.

There are many people out there that bought decades ago when prices were low and might even have their house paid off. You can actually buy information like this , homes with equity, homes owned by absentee owners , inheritance lists, etc. You might spend some money finding a deal...but if you end up saving a lot of money isn't it worth it?..
Another idea might be to try to get owner financing too. The benefit for the owner is they are making interest on their money. Another big benefit is that the seller will not have to pay a commission of 6%..if you want to use your buyer's agent they might still agree to paying them.

I think even if you are going to live in a house you should try and get the best possible price. Of course it helps to be a little flexible. If you say you only want to buy a 4bedroom house on a lot this size, with blah blah in this particular neighborhood..it'll be a lot harder to find a deal.

As I did post in another thread someone did just buy a house in Inglewood for $480k..the person they bought it from (a flipper) bought it for 331k in July 2013.. 132 West ELLIS Ave, Inglewood, CA 90302 | MLS# 13-723935 | Redfin

They did put work into it i'm sure , plus likely has to pay a commission unless they are agents too. Plus "holding costs" for that many months.. so it's not all profit. But in my opinion a bit safer than putting the money into the stock market and many people seem to agree. You do have to know what you are doing though or hire people that know what they are doing.

Also they cash buyers many times might not even be using their own cash....

You could ask your agent about submitting an offer where financing is NOT a contingency of the offer. Basically you have the option to use financing..but you won't be able to use the excuse of not having financing if your financing doesn't come through. This could be a little risky depending on how much Earnest money they are asking for.

This is another reason why trying to buy direct from owners could be a good strategy. Even $1 is legally binding for a contract ...so there is very little risk if you back out of the deal.

Start reading about real estate investing strategies if you don't already know about them. I think they are great to know about even if you don't plan on investing right now. You never know when you might be able to take advantage of a deal.

Last edited by jm1982; 02-03-2014 at 03:47 PM..
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Old 02-03-2014, 08:00 PM
 
12,825 posts, read 18,781,744 times
Reputation: 10843
China, India, Russia, Middle East, various places in Europe ....
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Old 02-05-2014, 03:03 PM
 
Location: M*I*A*M*I
224 posts, read 230,854 times
Reputation: 211
lots of cash buyers are just trading up. some of them took massive profits back in 2005/2006 from the sale of their homes and rode commodities or whatever to juice the returns even farther.
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