Homebuying Market – Out of Town Investment Firms
Sometimes you can wind up in a bidding war with another buyer when you are interested in a home; these days, that buyer is more likely to be an investment firm than it is another individual.
For a long time, the prices of homes were low. The real estate bubble from the early part of the decade had burst. And, a lot of owners and banks had houses to get off their hands, quick, in the wake of subprime loans that resulted in foreclosures and short sales.
But lately, home buyers are noticing a surprising trend. Prices on homes have started to climb again. And, houses in desirable areas are being snatched up as soon as they are listed. During the last real estate bubble, these sorts of phenomena were the result of small time home flippers hoping to make money on an investment. This time around, it’s large Wall Street investment firms. And, instead of buying to resell, they are holding onto the homes in a bid to become large scale landlords in hard hit markets that include Arizona, Florida and California.
How many homes? According to the New York Times, Los Angeles firm Colony Capital is spending $250 million a month on home-buying and already owns over 10,000 properties. New York firm Blackstone has purchased over 26,000 homes. They plan to earn by renting out the houses and possibly selling them at a later date if markets head back toward their highs.
While it can be difficult to compete with firms that have seemingly bottomless pockets, these tips can help you find a home that is right for you:
- Have your preapproval in place. Being preapproved doesn’t just mean that you know your budget. It means that you have a head start and can move more quickly once you find a home that you like.
- Get personal. Home sellers who are emotionally invested in their homes might feel more sympathetic to a family that will cherish the house than to an anonymous, far away firm. Send a note saying how much you love the home and how much you would love to live there.
- Look at higher priced homes. Houses that are priced to move are most attractive to investors. You may be able to get an edge by looking at higher priced places that they might not consider. Once you’ve looked, you can try negotiating for a more reasonable price.
- Consider making a competitive bid. A buyer may give you a chance at the house if you are willing to pay a bit more than your big league competitor. Just don’t get into a situation where the price of the house runs up higher than what it’s worth.
If you are having trouble finding a house because investment firms are buying the properties you want, don’t lose hope. In some markets, they are already beginning to scale back. And, by persisting and looking at many homes, you may get a jump on one and get yourself into a house you love.