Can I buy a house for less than 20% down payment? Today, I want to cover a couple of things when it comes to how much cash you need as down payment when buying a house. The first one is what you can do nationally. The other is what is potentially available to you as a home buyer or an investor versus what will actually succeed in this Bay Area market. Because these two are very different things, I think it’s really important to pay attention to these when you consider what you should do and what you can do here in this market.
Anyone who is looking to buy a home in the Bay Area will benefit from this content.
When you’re talking about making a cash offer in this real estate market, what do you need to know? Well, that’s what we’re going to talk about today.
I want to talk about the topic of cash in today’s real estate market, mainly because a lot of people want to ask how many cash offers are there. How many people are just throwing money at houses to succeed? How can I compete if I don’t have that cash? Or, should I use my cash because it will help me compete if I have it available? Let’s start by talking about the really obvious differences between a cash and a financed offer.
It’s the question that’s older than time itself: chocolate or vanilla, left or right, ask directions or just go for it, rent or buy? Because you have made it clear that this is a topic of interest today, I wanted to talk about the renting versus buying question here in the Bay Area, specifically. I have this conversation regularly with folks considering jumping into the housing market for the first time because interest rates are so low. Instead of renting their apartment, house, or wherever they currently live, they’re now considering having their own home.
Even though everybody said it’s impossible to get your offer accepted, you still did. You succeeded. You won—congratulations! The contract is now signed and ratified, and your earnest money is in. Everything’s all good… until you get that appraisal number. It turns out you’re one of those people who got an appraisal lower than the purchase price. Now, that’s a problem for a lot of reasons.
Today, we’re going to talk about something a little different than what we usually talk about—the distinction between market price and market value. I wanted to do this as sort of a market update because I think it’s a really important psychology that you need to understand if you’re going to enter the real estate market as a buyer, seller, investor, or even a renter. Right now in our real estate market, these two things are in a real big conflict, and it seems like one is a little bit out relative to the other.
A Zombie Foreclosure, other than just being a really fun name, is an opportunity for you to get a killer deal in this market. No zombie pun intended! It is another iteration of foreclosure that you should be aware of because it’s not going to show up in the traditional way like we talked about previously with foreclosures versus short sales.
“A housing bubble is started by excessive demand, then it leads to inadequate supply, and then exuberant spending really pushes and inflates the housing bubble further.” With all these bidding wars in our market, everyone’s been wondering when is the bubble going to pop? Unfortunately, I don’t have the answer to that. But what I do have is some evidence and some anecdotes to share with you today—more specifically, about exuberant spending—that will give us a better view of what’s really happening with the health, or lack thereof, of our market.
Short Sales versus Foreclosures. This is a topic that I’ve done a few videos on relative to the foreclosure side of things. Now, I’ve been seeing a lot of people ask about them again, especially since it’s such a competitive market. They probably still remember how it is back in the day when short sales and foreclosures were really good deals. Back then, you might have to do some work, but you can definitely get those houses for a lot cheaper. Now that some of the laws have recently changed, let’s talk about short sales and foreclosures again, how they differ, and why that matters.