NJ Couple Loses 15 Home Bids To All-Cash Offers, Including One $65,000 Over List – Homebuyers Are Now Considering These 3 Alternatives

Over the past several years, one common complaint heard by prospective homebuyers who are preapproved for a mortgage is the inability to compete with cash buyers for the limited supply of homes listed. You can't blame the sellers, as there is far less risk of the sale not going through when it's an all-cash deal.

One New Jersey couple, Kelcie Lesko and Tim Khalil, lost out on about 15 properties by June 2023, despite both making excellent salaries. They even bid $65,000 above the list price on a $315,000 home but still lost out to another offer.

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Feeling overwhelmed and disappointed, the couple has decided to continue renting, but their two-bedroom apartment costs them $3,000 monthly. That's a lot of money to fork over to a landlord with no equity, tax deduction or pride of ownership to show for it.

This couple's experience is not rare by any means. Thousands of other prospective homebuyers have faced similar obstacles since 2021. Many, like this couple, have chosen to delay buying a home until the market changes, while another large segment of prospective homebuyers has completely given up.

Is there any hope at all? Do younger generations have any alternatives to be able to share in the American dream of homeownership?

The answer is "Yes," but it may involve some self-sacrifice or thinking outside the box. Here are three alternatives for homeownership that are still available:

1) Looking At Other Venues- Nobody wants to move further away from family and friends. However, looking for a home in less populated rural areas or more inexpensive cities or states is a much easier way to find and afford a quality home. 

Redfin recently ranked the cheapest states to buy a home and Iowa, Oklahoma, Ohio, Mississippi and Louisiana were the five least expensive states. This may be a viable option for people who work from home or can transfer their jobs to another company location in a less populated area.

2) Buying A Tiny Home- There are more than 10,000 Tiny Homes (up to 400 square feet) in the United States today. The average cost is only $52,000, well below the $412,300 average-priced U.S. home. 

Buying a tiny home may not work for a family of four or five, but it is worth considering for a single individual or a young childless couple. A tiny home is likely about the same size as the apartment they may already be renting. However, it provides an opportunity to build equity, save on taxes, have a bit of land and learn about homeownership for far less than renting.

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3) Lease-Purchase A Home – Real estate companies such as Divvy Homes and Pathway Homes offer rent-to-own programs to their tenants. With Divvy Homes, you can purchase the home you rent within three years. Divvy can be found in 19 markets across the U.S. Dallas-based Pathway Homes purchases new construction homes for its rent-to-own program.   

While rent-to-own programs are sometimes more expensive, there are several advantages. You can start the programs before you have the full down payment saved or the best credit score. You can decide when you are ready to buy or if you change your mind, you can continue renting the home. But the biggest advantage is you won't have to compete with cash offers and other bidders on your home. 

So, despite the obstacles many would-be homebuyers face in the real estate market today, there are alternative options.

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