I Have Cash! Why is it so Hard to Buy an Orange County Home?
Recently, I had a client ask me this very question. It seems like a reasonable question. She doesn’t need to get a loan. She doesn’t need to sell a house. She has money, and she just wants to buy a house.
So, what’s the problem? Why is she having so much trouble buying an Orange County home?
Actually, there are several reasons that make it so hard.
- Under $750,000 is a sellers’ market.
This may be hard to believe given the current status of the economy, the real estate market in general, and the media, but it’s true.
There are only about two months of inventory in this price range for Orange County homes. Meaning, if nobody put a house up for sale, most of the homes would be sold at the end of two months.
- Below $500,000 is an even hotter sellers’ market.
There seems to be pent up demand, both from buyers wanting to buy to live and from investors looking to get a great deal.
- First Time Buyer Credit Expires November 30th.
This is driving many first time buyers to purchase their first Orange County home, and is effecting inventory.
- Many Orange County homes are selling with multiple offers.
This goes back to the lack of homes for sale in Orange County, in the lower price ranges and results in huge competition.
- Short Sales make up a large percentage of the inventory for Orange County homes.
Short sales occur when a seller owes more on their home than it’s worth and is asking the bank to take less than it’s owed upon sale of the home.
It can take months to find out whether the bank will accept the deal, which means it’s taking longer for many buyers to buy or even know if they’ll be able to buy an Orange County home.
- Foreclosures are selling like hotcakes.
The average time a foreclosure is for sale before going into escrow is only about two weeks.
- The lower the price, the more competition you will face.
Everbody wants the best price to buy their Orange County home for less, and the better priced a home is, the more competition you will be facing.
- To effectively compete, you need to be looking at any homes that are of interest to you quickly and making a decision.
It’s not unusual for a well-priced home to go into escrow in a matter of days. So, dawdling will not help your chances of buying an Orange County home.
So, why is she having so much trouble finding a home to buy? There’s a lot of competition; she’s looking in a very low price range. Additionally, if you choose not to look at a particular segment of the market, like short sales, it will make it more difficult to find your new home.
What can you do to buy an Orange County home in this market?
- Be patient. Expect to make a few offers before you get into escrow.
- Make sure you are fully pre-approved, not just pre-qualified for a loan.
- Give a strong earnest money deposit.
- Make a good down payment, if you can.
- Be willing to look at homes as they become available.
- Understand the market where you want to buy so that you’re ready to make a decision quickly when you find the right home.