Want to land your dream home? Bring cash!

Real estate for sale signYou've found the right house, you're approved for a loan, your credit score rocks, you have the down payment. Let's make a deal, right?

Not so fast. There's a deal-breaker in town and it's called "cash." Those who can buy a home with it are elbowing out those who can't. Turns out there are a lot of folks with cash to burn, especially in states where home prices tanked and foreclosed properties selling for less than $250,000 are plentiful. Foreclosures made up more than half of all sales of existing homes in Las Vegas and Phoenix in December, for example, according to MDA DataQuick.

Nationwide, about 22% of resale homes sold in December were bought entirely with cash, up from 16% the previous year, according to the National Assn. of Realtors, a realty trade group. The peak for all-cash sales was last spring, when they made up 30% of sales. In Las Vegas, 46% of sales in December were all cash; in Miami, they made up 54% of sales, according to DataQuick.

"There's a lot of cash out in the marketplace," says Marty Rodriguez, a Century 21 agent in Glendora, Calif. "It makes buyer competition rougher than usual." Sellers, whether banks or individuals, love all-cash transactions because those deals are easier and typically don't fall through. Cash, apparently, really is king.

One of Rodriguez's clients bought a bank-owned property in Azusa, Calif., in late November for $190,000. He completed a "major re-do" of the house, which just sold for $360,000. The deal currently is in escrow. How did the buyer pay for it? Cash. Another agent in her office recently repped a buyer who bought a Glendora repo for cash -- $280,000 -- and flipped it for $400,000.

"Investors are bringing cash to the court house steps," Rodriguez says, "buying foreclosed homes, cleaning them up, and flipping them."

Some individual investors who don't have wads of cash lying around are pooling what they have with other cash investors, agents say, easing the way to what otherwise would be a tough home sale. Instead of flipping the gussied-up homes, investors sometimes rent them out, or take mortgages out on them down the road to buy other distressed properties.

Sounds like buyers relying on financing don't have much of a prayer. And in the competitive foreclosure market, in particular, that can be true. It's not uncommon for a low-priced home to get 100 offers, agents say.

So how can a cash-strapped, but well-qualified, buyer jump to the head of the line?

Agents recommend that buyers have a hefty down payment -- at least 20%. Make sure to secure a letter from your lender qualifying you for a loan higher than the offer you're making. Find out when foreclosed properties are hitting the market so you can be first in line with an offer; sometimes the early-bird does get the worm.

"Be prepared for a grueling experience," Rodriguez says.
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