What it Takes for Cash Investors to Buy Homes in Sacramento
Many of the cash real estate investors I run into believe that Sacramento real estate agents are dumber than a bag of nails. They must, or why else would they send these stupid emails all about their cash offers and how much they love to pay cash and oh, wait, did they mention they have cash and it’s a cash offer? It is it possible we real estate agents can be blindsided by cash and forget all about ethics and, let’s not overlook, the sales price?
It’s hard to believe when you listen to me rant about cash investors that I got my start in real estate in the 1970s by working with investors. But these were first-time investors who generally put down the minimum required, which back then was 7% (enough to pay commission and closing costs) and obtained owner financing. I generally wrote the offer in my name or assignee and then assigned it to the investor in exchange for the commission.
Further, I was so young and foolish that I thought there was no point in looking at the property because it was just four walls and a roof. Before the 1984 Easton vs. Strassburger decision.
Our Sacramento market is attracting a different kind of cash investor. These are not the cash investors buying in markets such as Beverly Hills and San Mateo, in which almost one out of every 3 sales is to a foreigner with cash. These are second-rung cash investors who may or may not be actual cash investors. They might be investors with a handle on a hard-money source and parading the offer as a cash offer when, in fact, it is not.
Typically, these investors want to buy the home under market value. That doesn’t work so well with short sales, and it doesn’t work with Sacramento home sellers who demand market value, either. It works better with the desperate sellers who need to quickly sell and are willing to discount the sale, and our market is not exactly brimming with those.
As I used to say to my first-time investors from the 1970s, there is no shame in paying market value or even above market value if you end up with the property. One way you own real estate and another way you do not. The guys in southern California understand this, but in Sacramento they still want to get a “good” deal.
I’ve had investors call and demand that I do business with them when their cute tactics no longer worked. They try to appeal to my logical side, being the side that wants to work with investors and bring on new buyers, but they forget that I am working for the seller. Their words fall on deaf ears, and they don’t much like it. You know what? That’s too bad for them.