Hello All,

Lately we have been encountering a lot of all cash offers on the houses we bid on. We keep hearing that these are mainly Asian buyers (not meant to be a racist statement!) making these offers. Not sure who these mysterious buyers with a ton of cash are coming from? In some cases all cash offers for what one of the forum members termed WTF pricing. If this is indeed true, then most of us don’t have any hopes of getting any homes at non-WTF prices in Irvine.

What has been your experience? We keep running into multiple offers (>5) per home and keep losing it to all cash offers or folks with >40% down payments.

Would like to hear if any of you are running into the same situations in Irvine?

2Hot2Buy

2hot2buy - 23 July 2009 04:01 AM

Hello All,

Lately we have been encountering a lot of all cash offers on the houses we bid on. We keep hearing that these are mainly Asian buyers (not meant to be a racist statement!) making these offers. Not sure who these mysterious buyers with a ton of cash are coming from? In some cases all cash offers for what one of the forum members termed WTF pricing. If this is indeed true, then most of us don’t have any hopes of getting any homes at non-WTF prices in Irvine.

What has been your experience? We keep running into multiple offers (>5) per home and keep losing it to all cash offers or folks with >40% down payments.

Would like to hear if any of you are running into the same situations in Irvine?

2Hot2Buy

Have these homes been in the 700-900k range?

you got to be kidding me. nice try

Frank69m,

Yes, from 650-800K atleast. that is what we are looking at.

Can you provide some examples of the properties you have placed offers on and had this occur? Redfin links will do just fine.

Hahaha, fooled all you guys… I am 2ugly2sell….                                                                              just kidding…

Sometimes i wonder if these Cash Rich Asian buyers are so smart… I mean why in the world would you want to put down $650,000 to $800,000 when it is so cheap to borrow money at 5.375%? I would only put that kind of money down if A) mortgages rates are at 12% B) unemployment reaches 15-20%., and C) when it feels like the world is coming to an end.

PANDA - 23 July 2009 04:25 AM

Hahaha, fooled all you guys… I am 2ugly2sell….                                                                              just kidding…

Sometimes i wonder if these Cash Rich Asian buyers are so smart… I mean why in the world would you want to put down $650,000 to $800,000 when it is so cheap to borrow money at 5.375%? I would only put that kind of money down if A) mortgages rates are at 12% B) unemployment reaches 15-20%., and C) when it feels like the world is coming to an end.

They can’t qualify any other way. It think Bk has explained the nature of many of their businesses (all cash, can’t document).

PANDA - 23 July 2009 04:25 AM

Hahaha, fooled all you guys… I am 2ugly2sell….                                                                              just kidding…

Sometimes i wonder if these Cash Rich Asian buyers are so smart… I mean why in the world would you want to put down $650,000 to $800,000 when it is so cheap to borrow money at 5.375%? I would only put that kind of money down if A) mortgages rates are at 12% B) unemployment reaches 15-20%., and C) when it feels like the world is coming to an end.

To avoid getting caught by the IRS. Looks pretty fishy if you are deducting a heck of a lot in interest and you only claim 80k AGI on your 1040.

on side note, THE USE OF ALL CAPS is very telling

PANDA - 23 July 2009 04:25 AM

Hahaha, fooled all you guys… I am 2ugly2sell….                                                                              just kidding…

Sometimes i wonder if these Cash Rich Asian buyers are so smart… I mean why in the world would you want to put down $650,000 to $800,000 when it is so cheap to borrow money at 5.375%? I would only put that kind of money down if A) mortgages rates are at 12% B) unemployment reaches 15-20%., and C) when it feels like the world is coming to an end.

If you cannot substantiate your income with tighter lending standards, a loan may not be an option.  Even more scary is if they have so much money that the cost of an Irvine SFR is pennies to them.

19 Winterfield and 28 Granada in West irvine are couple that come to mind.

Mcdonna1980 - 23 July 2009 04:30 AM

PANDA - 23 July 2009 04:25 AM

Hahaha, fooled all you guys… I am 2ugly2sell….                                                                              just kidding…

Sometimes i wonder if these Cash Rich Asian buyers are so smart… I mean why in the world would you want to put down $650,000 to $800,000 when it is so cheap to borrow money at 5.375%? I would only put that kind of money down if A) mortgages rates are at 12% B) unemployment reaches 15-20%., and C) when it feels like the world is coming to an end.

To avoid getting caught by the IRS. Looks pretty fishy if you are deducting a heck of a lot in interest and you only claim 80k AGI on your 1040.

on side note, THE USE OF ALL CAPS is very telling

I have to say that I don’t really buy this argument.
It makes sense to a point, I’m sure that there’s some undeclared inome.
But, really, if you’ve been claiming less than 80k AGI for the last 10-20 years, and then all of a sudden you’re paying property taxes on a 800K property and no mortgage deduction, do you think the IRS won’t notice?
The IRS is not that dumb.  It’s trivial to write the piece of code that will flags suspicious tax payers that have lots of property and no income.

I don’t have an alternate theory to offer, but this argument is not that convincing.

Actually, here’s one, based on a couple I know.  They bought a house recently with a huge down payment.
One of them is asian, and the parents had been contributing the maximum amount that is tax-free each year to the trust fund.
I believe the limit is currently 12K per year.  Do that for 20 years and you can easily leave your child a 300-400K down payment.
Now, I suppose that if you have two sets of well-to-do Asian parents, you can have 600-800K…
So I can see how this would be possible.
But just because it’s possible it doesn’t mean that it’s likely or common.

I’ve been seeing quite a few houses in this price range that have gotten multiple offers (or so I’ve heard), then go into escrow within a couple days of hitting the market. I wouldn’t be surprised if lots of them are Asian cash buyers, but I don’t know any specifics.

traceimage - 23 July 2009 05:50 AM

I’ve been seeing quite a few houses in this price range that have gotten multiple offers (or so I’ve heard), then go into escrow within a couple days of hitting the market. I wouldn’t be surprised if lots of them are Asian cash buyers, but I don’t know any specifics.

absolutely agree. at least 3-5 homes including the ones I mentioned in one of the earlier posts. homes have multiple offers within 3 days and goes into escrow. may be they are aggressively priced? not sure. not for us atleast

I don’t think it’s that they’re so aggressively priced, but that would-be buyers are in a frenzy right now due to lack of inventory. But it’s definitely pretty nuts out there!

If you go to the IrvineRealtorSite, then you can go through the data of past sales, and see that on a percentage basis that cash buyers are not much higher than previous months. Just because you are noticing cash buyers, doesn’t mean they haven’t always been there. They were there in 06 just as they are in 09. If you weren’t actively looking in 06 for a house as you are now, then you wouldn’t know or hear about cash buyers, would you?

graphrix - 23 July 2009 06:07 AM

If you go to the IrvineRealtorSite, then you can go through the data of past sales, and see that on a percentage basis that cash buyers are not much higher than previous months. Just because you are noticing cash buyers, doesn’t mean they haven’t always been there. They were there in 06 just as they are in 09. If you weren’t actively looking in 06 for a house as you are now, then you wouldn’t know or hear about cash buyers, would you?

Are you saying the FCBs have been there since the beginning of time?

Awesome.

2hot2buy - 23 July 2009 04:01 AM

Hello All,

Lately we have been encountering a lot of all cash offers on the houses we bid on. We keep hearing that these are mainly Asian buyers (not meant to be a racist statement!) making these offers. Not sure who these mysterious buyers with a ton of cash are coming from? In some cases all cash offers for what one of the forum members termed WTF pricing. If this is indeed true, then most of us don’t have any hopes of getting any homes at non-WTF prices in Irvine.

What has been your experience? We keep running into multiple offers (>5) per home and keep losing it to all cash offers or folks with >40% down payments.

Would like to hear if any of you are running into the same situations in Irvine?

2Hot2Buy

The back-up offer on the escrow I have my buyers in is a an all cash offer (around $750k)....my buyers are putting 25%+ down.

irvine_home_owner - 23 July 2009 06:14 AM

graphrix - 23 July 2009 06:07 AM

If you go to the IrvineRealtorSite, then you can go through the data of past sales, and see that on a percentage basis that cash buyers are not much higher than previous months. Just because you are noticing cash buyers, doesn’t mean they haven’t always been there. They were there in 06 just as they are in 09. If you weren’t actively looking in 06 for a house as you are now, then you wouldn’t know or hear about cash buyers, would you?

Are you saying the FCBs have been there since the beginning of time?

Awesome.

The FCBs are Irvine, they were here in the 80s and 90s. I know you weren’t in the area back then, but I was. Some of the comments I have in my head about Irvine from back then can’t be repeated, since they are not PC today, nor do I think they deserve to be repeated. But, lets put it this way, the demographic has always been less Caucasian than some cities of OC.

When I attended UCI in the early 90’s, it was known as the University of Chinese Immigrants.

Just curious: How does a foreign govt. with diplomatic ties invest in residential real estate? What about a foreign govt. without diplomatic ties with the U.S.? How do they invest in residential real estate?

hedgehog - 23 July 2009 05:45 AM

Actually, here’s one, based on a couple I know.  They bought a house recently with a huge down payment.
One of them is asian, and the parents had been contributing the maximum amount that is tax-free each year to the trust fund.
I believe the limit is currently 12K per year.  Do that for 20 years and you can easily leave your child a 300-400K down payment.
Now, I suppose that if you have two sets of well-to-do Asian parents, you can have 600-800K…
So I can see how this would be possible.
But just because it’s possible it doesn’t mean that it’s likely or common.

Actually, each parent can leave 12K to a child and 12K to the spouse, so that’s 48K a year at which point the money adds up quickly.  I have acquaintances who bought a house this way (not $800K all cash), but got a sizable down payment after being married for three years.

ABC123 - 23 July 2009 01:52 PM

hedgehog - 23 July 2009 05:45 AM

Actually, here’s one, based on a couple I know.  They bought a house recently with a huge down payment.
One of them is asian, and the parents had been contributing the maximum amount that is tax-free each year to the trust fund.
I believe the limit is currently 12K per year.  Do that for 20 years and you can easily leave your child a 300-400K down payment.
Now, I suppose that if you have two sets of well-to-do Asian parents, you can have 600-800K…
So I can see how this would be possible.
But just because it’s possible it doesn’t mean that it’s likely or common.

Actually, each parent can leave 12K to a child and 12K to the spouse, so that’s 48K a year at which point the money adds up quickly.  I have acquaintances who bought a house this way (not $800K all cash), but got a sizable down payment after being married for three years.

I think there is also a lifetime exemption of like $1mil which you can give tax free.

Or, you just have your parents live with you.

Delroy

C Delroy Spuckler - 23 July 2009 02:00 PM

ABC123 - 23 July 2009 01:52 PM

hedgehog - 23 July 2009 05:45 AM

Actually, here’s one, based on a couple I know.  They bought a house recently with a huge down payment.
One of them is asian, and the parents had been contributing the maximum amount that is tax-free each year to the trust fund.
I believe the limit is currently 12K per year.  Do that for 20 years and you can easily leave your child a 300-400K down payment.
Now, I suppose that if you have two sets of well-to-do Asian parents, you can have 600-800K…
So I can see how this would be possible.
But just because it’s possible it doesn’t mean that it’s likely or common.

Actually, each parent can leave 12K to a child and 12K to the spouse, so that’s 48K a year at which point the money adds up quickly.  I have acquaintances who bought a house this way (not $800K all cash), but got a sizable down payment after being married for three years.

I think there is also a lifetime exemption of like $1mil which you can give tax free.

Or, you just have your parents live with you.

Delroy

Yup, it’s a million for life, beyond that 12k a year.  As a practical manner, few people will even hit the million dollar mark.

hedgehog - 23 July 2009 05:45 AM

Mcdonna1980 - 23 July 2009 04:30 AM

PANDA - 23 July 2009 04:25 AM

Hahaha, fooled all you guys… I am 2ugly2sell…. just kidding…

Sometimes i wonder if these Cash Rich Asian buyers are so smart… I mean why in the world would you want to put down $650,000 to $800,000 when it is so cheap to borrow money at 5.375%? I would only put that kind of money down if A) mortgages rates are at 12% B) unemployment reaches 15-20%., and C) when it feels like the world is coming to an end.

To avoid getting caught by the IRS. Looks pretty fishy if you are deducting a heck of a lot in interest and you only claim 80k AGI on your 1040.

on side note, THE USE OF ALL CAPS is very telling

I have to say that I don’t really buy this argument.
It makes sense to a point, I’m sure that there’s some undeclared inome.
But, really, if you’ve been claiming less than 80k AGI for the last 10-20 years, and then all of a sudden you’re paying property taxes on a 800K property and no mortgage deduction, do you think the IRS won’t notice?
The IRS is not that dumb. It’s trivial to write the piece of code that will flags suspicious tax payers that have lots of property and no income.

I don’t have an alternate theory to offer, but this argument is not that convincing.

Actually, here’s one, based on a couple I know. They bought a house recently with a huge down payment.
One of them is asian, and the parents had been contributing the maximum amount that is tax-free each year to the trust fund.
I believe the limit is currently 12K per year. Do that for 20 years and you can easily leave your child a 300-400K down payment.
Now, I suppose that if you have two sets of well-to-do Asian parents, you can have 600-800K…
So I can see how this would be possible.
But just because it’s possible it doesn’t mean that it’s likely or common.

You bring up a good point, how likely are they to get caught? I don’t really know. But judging by the low number of judgements past for this the IRS either has caught people doing this and done nothing about it or they don’t have the capability to cross reference all the different organizations that are involved in the tax recording process.

Given how many different organizations are involved in tax recording it’s likely that the IRS relys mostly on the filing of personal income taxes to find people to audit(for the vast public.richer people are probably watched more closely). There are like thousands of different brokerage houses, banks, county assessor offices, etc and they all make mistakes in their records and have to issues corrected statements, etc. I’m sure it a big mess.

The people that are trying to evade taxes would not try to deduct the property taxes either. Who knows if they will face punishment for this. But my answer to Panda wasn’t about this. I think it is a real likelihood that people would not to take out a mortgage because they aren’t going to deduct it on their mortgage and they think they can fool the IRS that way.

I doubt that anyone who is smart enough to have accumulated enough cash to pay cash for real estate is stupid enough to use cash to purchase a home in order to try to evade taxes.  All merchants, banks, etc. are legally required to report all cash transactions of $10,000 or more to the IRS.  That is how Spitzer got busted and his transactions were all under $10,000.  The banks also report suspicious amounts of cash withdrawn or deposited.

Purchasing real estate with cash is kinda like blaring a horn the IRS’s ear and yelling, “Hey, come look at my cash transactions!”

graphrix - 23 July 2009 08:51 AM

irvine_home_owner - 23 July 2009 06:14 AM

graphrix - 23 July 2009 06:07 AM

If you go to the IrvineRealtorSite, then you can go through the data of past sales, and see that on a percentage basis that cash buyers are not much higher than previous months. Just because you are noticing cash buyers, doesn’t mean they haven’t always been there. They were there in 06 just as they are in 09. If you weren’t actively looking in 06 for a house as you are now, then you wouldn’t know or hear about cash buyers, would you?

Are you saying the FCBs have been there since the beginning of time?

Awesome.

The FCBs are Irvine, they were here in the 80s and 90s. I know you weren’t in the area back then, but I was. Some of the comments I have in my head about Irvine from back then can’t be repeated, since they are not PC today, nor do I think they deserve to be repeated. But, lets put it this way, the demographic has always been less Caucasian than some cities of OC.

Hehe… I need to add [sarcasm] tags to my posts… c’mon… you should know me by now.

I’ve actually been in Irvine since the mid 80s… 70s if you count the visits to Lion Country Safari.

Just for the record… are you acknowledging the existence of FCBs? Heh.