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It used to be that when a builder bought property on which he was going to build a house (or houses) he wanted to feel that he already made a profit on the day he closed the escrow.

He used to be able to do this by being an experienced local builder that knows his market. He has ready cash from a bank or investors and can close the property quickly. He can approach a seller, offer his cash and close quickly. The seller does not have to do any preparation of the property; no repairs, no paint, no fix up, no clean up, obtain no reports and has absolutely no hassle. Also, many times the builder allows the seller to stay in the property for a couple of months after the close of escrow at no cost (although many lenders will only allow the sellers to retain possession for no more than 60 days).

For these benefits, the seller might be willing to sell at a reduced price. Builders also knew the ropes for searching foreclosed properties and distressed properties (now known as short sales). However, our current heated, appreciating marketplace, which started earlier this year, has put greater pressure on these builders.

End users (people who buy the house for themselves to fix up or build) now also offer all cash, no repairs, quick closes and let the sellers stay in the property for as long as can be negotiated. End users also now have access to foreclosed properties and short sales.

Most foreclosed properties are listed with real estate agents by the asset managers that serve as intermediaries for the lenders who own the properties. This competition from end users, who are looking for a long-term investment for their families, is generally going to be greater than from a builder who is looking to make a quick profit.

Based on these facts, you would think that builders would have stepped away from the marketplace. However, instead of these builders folding up their tents in the night, they have stayed in the game. On many multiple-offer situations on well-located, decent-sized lots, at least one or more of the offers is from a builder.

Outliers are the seller's favorite kind of buyers. Builders would like the good, conforming sized lot, end users would like the ability to live in it "as is" or build later and outliers are ready to buy anything that works for them. Outliers are folks that will pay a substantially higher price than any comparable (even considering a rising market) or anyone else who is bidding.

Why? They are sick of looking, sick of losing and finally have made a decision to get ahead of the rising market by making a quantum leap over any possible competition. No one can compete with outliers.

Wendy McPherson manages about 145 agents for Coldwell Banker in two Menlo Park offices, plus Woodside and Portola Valley. She can be reached at WMcPherson@cbnorcal.com.

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