Whenever I've worked with a buyer who is interested in making a really low-ball offer on a house in the Tucson Foothills, particularly a vacant house that's been languishing on the market for four, five months or more, my first question is always, "are you taking a mortgage or paying cash"?
If it's at all possible for them, I counsel them to consider making a cash offer combined with a super-fast close of escrow, two weeks or so. When a seller sees that combination of a cash offer and a closing date so close that they can almost smell the money, their objections tend to melt away and the low-ball offer begins to look a lot more attractive. We've been able to make some incredibly good deals using that strategy.
Now with the sub-prime mess spilling over into all mortgage categories, including prime borrower jumbo loans - as reported in today's Wall Street Journal - Mortgage Fears Drive Up Rates On Jumbo Loans, the (low-ball) cash offer-fast close strategy, may by necessity, become even more attractive to sellers as the ranks of mortgage eligible buyers dwindles. And for home buyers able to make a cash offer, there should be many more opportunities to make a great deal.
Here in the Tucson Foothills, with the average sale price of a single family home hovering around $700,000, many of the mortgages taken are prime jumbo. Until now, this wealthier, higher-end of the market has seen fewer adverse effects from the mortgage mess, but it looks like that's about to change.