Inside Real Estate: The Hierarchy of Buyers. Often times if there are multiple offers, there is some confusion about how strong particular buyers are. We share with you today is what is generally perceived to be the hierarchy of buyers from strongest to weakest.
The strongest buyers are, not surprisingly, all cash buyers. They have the money in the bank ready to go, teed up, ready to buy. These are solid gold buyers for most sellers, especially if they have contingencies or need to find another house, or something where strength and quickness of closing is important to them.
The downside for all cash buyers for a lot of sellers is they can sometimes be a little too demanding on price. They want a little more of a discount for the fact they are all cash than other buyers who are not. It makes them less appealing at times. No question, though, in terms of financial strength, all cash buyers win the day.
The next strongest buyer would be a non-contingent finance buyer. That is a buyer who does not have to sell their property and has no hang-ups with their current residence, and they are pre-approved and ready to go. These are good buyers, especially if they wave the appraisal contingency and if they have enough cash to close the escrow regardless of where the property appraises. Those are good buyers. They are almost as good as all cash buyers, but not quite because you still have to get through the loan process.
Close to the non-contingent finance buyer would be an all cash buyer who needs to close escrow on their property. It will totally depend on what stage the buyer’s transaction is at. If all contingencies are removed and they are a week away from closing, that offer is pretty strong. If they just went into escrow and the buyer still has an inspection contingency that weakens their situation some because there is a higher chance that their transaction may fall out of escrow. They are still very strong buyers, especially if all contingencies have been removed on their property and they are close to closing escrow.
The next buyer in the hierarchy are non-contingent buyers subject to close of escrow on their home. Often time buyers will sell their home and then go purchase a property. If they do not have to sell their property but their property is in escrow, okay, that can be a fairly strong situation. It depends again how close they are to closing escrow and what the status is of their underlying transaction. If the buyer still has an inspection contingency; that weakens their situation quite a bit because they could fall out of escrow. If they are four days away from closing escrow on their property, that significantly raises the level of strength of them as a buyer.
Lastly, on the bottom of the hierarchy, buyers are contingent buyers. If you are a buyer who has a home you need to sell in order to purchase, unfortunately in terms of the hierarchy of buyers, you are at the bottom of the list. Obviously it is going to depend 100% on the sale-ability of your home and where you price it. The onus will be on you as a buyer and your agent to prove to the seller that you have a highly sale-able property that should not have any problem selling whatsoever. You are still going to have to get through the contingency process on that transaction. That makes you not nearly as strong as some of the other buyer categories.
I hope that helps you understand the hierarchy of buyers and where you would fit in as potential buyers in the event there is competition.
As always, if we can help you or anyone you know with their real estate needs, please give us a call at 925-785-7777 or visit us at
680homes.com.
