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Home buyers' market favors those with cash

  • Drew Bolton, left, and his fiancee Jennie O'Dougherty hang drapes on the second night in their Santa Rosa home on Thursday. The couple, with an FHA-backed loan, struggled to find a house before being connected with a buyer who wished to sell to a family rather than an investor. (JOHN BURGESS / The Press Democrat)

Sharon Hislop figures she made about a dozen offers to buy a home this year, but she eventually lost count.

Each time, she found herself vying against multiple offers for the same home. Typically “someone with cash would come in,” she said, “and how do you compete with that?”

In time, Hislop gave up trying to find a place in Rohnert Park, where other family members live. Now, she is anxiously waiting for escrow to close on a three-bedroom house in southeast Santa Rosa priced in the low $300,000s. If she succeeds, it will be partly because she was willing to give the seller more time to move.

“You get the rug pulled out from you so many times,” said Hislop, a grandmother and a warehouse store stocker. “It is an emotionally draining experience.”

It's a seller's housing market in Sonoma County these days, but with a twist. Unlike the hot market of eight years ago, the competition now includes plenty of buyers who don't need loans to make their purchases. Those all-cash buyers often are winning the bidding wars for homes.

“There's never been as much cash as there is in the market today,” said John Duran, a broker with Frank Howard Allen in Santa Rosa.

Such cash buyers made one out of every three purchases in the county in April, double the historical rate, according to DataQuick, a San Diego-based real estate information service.

Just over half of the cash buyers in California are investors or people buying their second home, DataQuick spokesman Andrew LePage said. But another 45 percent are buyers who simply have the wherewithal to draw cash from existing properties, stocks, retirement funds, other assets or family members.

Sellers often prefer all-cash offers. Typically, such deals are easier to complete because they don't require a bank's approval based on either the value of the home or the financial strength of the buyer.

To compete with cash buyers, many regular buyers are taking on additional risk. Increasingly, they are pledging to buy a home even if a property appraiser estimates it is worth less than the sales price. In such cases, the buyers must be able to pay out of pocket any amount their lenders won't cover.

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