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Trying to buy a home? Here’s how to compete with cash offers from investors

Investors are targeting the Phoenix area to turn homes into rental properties.
Published: Mar. 23, 2022 at 11:34 AM MST
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TEMPE, AZ (3TV/CBS 5) - Who doesn’t love a good before and after? In Tempe, local investors scooped up a dated two-bedroom, one-bathroom house, added square footage, and turned it into a home with three bedrooms and two bathrooms. It recently sold over the asking price with multiple offers in a single weekend.

It’s a common scenario playing out all over the Phoenix metro area as investors purchase homes to flip. Other investors are targeting the area to turn homes into rental properties. “We’re seeing about 25% or so of all the homes sold over the last six, seven, eight months have been to investors,” said Trevor Halpern, a Phoenix-based real estate agent. “Real estate has always been a very good hedge against inflation. If you live in San Francisco, Los Angeles, Portland, Seattle, you’re looking at Phoenix and saying, ‘There’s still value there.’ So, instead of investing in your home turf, you’re going to send your money here.”

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How you can compete with investors

Cash is attractive to home sellers because it’s not risky. So, how do regular buyers compete with the cash that investors can bring to the table? Is it even possible? Halpern says it is, but you have to reduce the risk for the seller. “We may be able to waive the appraisal contingency, if possible. If you have the cash available,” Halpern suggested. “We may be able to go and buy it as is.”

Then find out what the seller actually wants. It might be more than money. The conversation may go something like this:

Buyer’s agent: “Hey Mr. and Mrs. Agent, what do your sellers really want to see?’”

Seller’s agent: “You know, we’re seeing a bunch of quick closings on the offers. They can’t do that. They need 60 days.”

Buyer’s agent: “OK. Well, tell me your favorite closing date, and then we’ll write that into the offer.”

Despite the perception that it’s all California money coming into Arizona, Halpern says a substantial number of investors interested in Phoenix are from Seattle and Portland. According to the National Association of Home Builders, the median new home price in Phoenix, Mesa, and Chandler is $469,193.