So Much Money Chasing So Few Houses

Buying a home has become a struggle because there is so much money chasing so few houses. Once a home is listed for sale on the MLS an immediate bidding war erupts. Just a few years ago I was fielding calls from sellers frustrated by the amount of time it was taking to find a buyer for their home. Today I get calls from Buyers who are frustrated about the lack of homes on the market. What happened?

Markets are based on supply and demand. Usually, supply and demand are in balance and the market is stable and steady. Houses are listed for sale and buyers shop for one that suits their lifestyle needs. Location was the key to value and house prices were fairly predictable.

Today the market is seeing a heavy influx of cash from investors seeking to park money in the residential real estate market. These investors are not the mom-and-pop type investors of the 2000s who bought a couple of homes and rented them out as a side gig. Today’s investors are institutional-type organizations looking to park millions of dollars in a real estate investment.
Affordable homes, and it almost makes me feel silly writing this, in the $250-$600 K range in the Atlanta market are being grabbed by institutional investors like they were the last Barbie Doll on the shelf on Christmas Eve. These institutional buyers are paying cash and make offers that probably do NOT include appraisal or inspection contingencies.

Families looking to buy a home to live in are at a serious disadvantage because they have to get a loan from a bank to buy a home. Banks don’t make loans without doing an appraisal. And most families need an inspection because a new roof or replacing an old HVAC system will break their family budget.

Many folks ask what the difference is between a cash offer from an institutional buyer and a mortgage-loan-based offer from a family-type buyer. The answer is the elimination of uncertainty from the selling equation. Sellers can accept an institutional offer and know they are going to the closing within 20-30 days. A family-type offer typically has the inspection contingency uncertainty and the question of whether the house will appraise for the bid-up price of the home.

If you are a seller – there are some steps we can take to get top dollar from Institutional Buyers. Don’t accept the first offer you receive. Call me and we can boost that sales price.

If you are a buyer – there are now ways to make your offer competitive with the Institutional Buyer offers. There are relatively safe ways to make your offer “as good as” the offer from that large real estate investor conglomerate. Let’s talk!