'Cash is king' in market for foreclosed homes
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Jay Nielsen stands with his girlfriend, Stephanie Boursaw, and her daughter, Jaydee, outside the home he's buying in Vallejo after an arduous search. Photo: Carlos Avila Gonzalez / The Chronicle
As an aspiring first-time home buyer, Jay Nielsen hoped to find a cheap, bank-held foreclosure in Vallejo that he could finance with a Federal Housing Administration mortgage. What he didn't expect was having to compete with buyers willing to pay in all cash.
"Since January, I've put in 10 bids (on foreclosed homes); some were up to $80,000 over asking price and were still turned down," said Nielsen, 41, a medical assistant. Each time, the banks selected offers from investors with all-cash offers - even when those offers were lower than his, Nielsen said.
"Cash is king right now," said Glen Bell of Keller Williams Realty in Berkeley. For foreclosed homes, "a cash offer that hits the target price will many times trump a higher-priced offer with a loan. The ability to close has become just as important to banks as price. The prospect of a property being tied up longer, still on their books and then falling out is costly."
