We at Miami Riches work with local and international buyers and sellers. The best deals out there are usually short sales, foreclosures or REOs which typically take only cash offers. In the past couple of years, the majority of these deals have been sold to foreigners and locals are starting to complain because they are left out and have not been able to take advantage of the real estate rebound we are experiencing in Miami.
One of the biggest problems for locals is that nowadays lenders require bigger down payments. Since the savings rate is in USA is very low compared to other countries, it is very difficult for local buyers to meet this requirement of bigger down payments. Even if you meet the down payment requirement, after you have a contract to buy a property and the contract is contingent upon the buyer obtaining financing, there are factors that can preclude the buyer from getting the final loan approval. For example, nowadays most buyers meet the income criteria set by lenders but have a short sale or a foreclosure in their credit history because they strategically defaulted on their loan after they bought a property in the height of the boom.
If you are a seller who has a really good deal in your hands, are you going to be willing to sell to a buyer with financing while there are still a lot of cash buyers out there that can close right away?
Even though properties in Miami are not as cheap today as they were a couple of years ago, there is still a lot of foreigners waiting to pay cash for the best deals. There are so many foreigners buying real estate in Miami that the association of Realtors added a new field this month to the MLS to track the country of origin of buyers.
We have seen a clear trend in the past 12 months. Foreigners are buying most of the lowest priced deals, usually short sales, foreclosures and REOs; while the few locals that can get a mortgage are buying mostly resales which are usually priced higher than their distressed sales counterparts. If you are going to pay cash for a property, start looking for these best deals. We have an option in our search properties page in the Miami riches website, where you can only search for short sales and foreclosures.
It is very encouraging to hear that this year the savings rate in the US ticked higher and that lenders are starting to lend more and more. This will definitely help the local market but we need to see more of this to get to a more balanced market where locals can also take advantage of the deals available.
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