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Low bids driving down home prices

Recent research shows that low bids by investors are driving down the price of homes.

Recent research shows that low bids by investors are driving down the price of homes.

Investors that submit low bids on homes are putting downward pressure on housing prices, according to the recently released Campbell/Inside Mortgage Finance HousingPulse Tracking Survey.

The number of cash buyers in the housing market increased to a record 33.2 percent, which is a 3.6 percent increase from the 29.6 percent reported from a year earlier.

According to the HousingPulse survey, buyers who use cash are able to bid significantly lower and win many properties because they offer a shorter and more reliable closing timeline. Bids on distressed properties are even more successful because mortgage servicers selling foreclosed properties prefer to settle transactions within 30 days.

“Investors usually offer 10 to 20 percent below list up to a price of $250,000," an agent in Arizona reported. "First time homebuyers are (offering) close to list (price) as are current homeowners. Investors want two to four weeks to close. Financing buyers end up with six to eight weeks plus to close.”

Investors are not always the first offers accepted, the source reported, but they often end up winning properties after other bids are eliminated because of mortgage approval or timeline problems.

With foreclosures still plaguing hundreds of communities, many of which are in the hardest-hit western states, Americans are likely to be able to take advantage of the affordable relocation cost that comes with moving for months to come.