House shoppers could be forgiven for looking sideways at the other folks milling around at open houses — the competition, it would appear.

But in today’s tight real estate market, the less obvious competition may be builders scouting for buildable land in Portland’s prime neighborhoods. They show up cash in hand, and sometimes outbid “regular” buyers – even if it means paying more than asking price.

Market forces are pushing builders toward areas they would have considered too much of a hassle in the past. That puts them in competition with homebuyers looking for an affordable starter home.

“Unfortunately,” says Portland real estate broker Billy Grippo, first-time buyers “don’t stand a chance.”

In the waning days of the real estate crash and into 2012, a steady supply of foreclosed and poorly maintained homes offered redevelopment opportunities with little interest from other buyers. Now, with the economy steadily improving, foreclosures dropping and the real estate market buzzing, those opportunities are harder to come by.

» More on the market forces driving builders toward infill

Dave Thomas, a Portland carpenter, started looking for a home late in 2012. He saw homeownership as a step toward financial independence and, like many, worried his opportunity would slip away as home prices and mortgage rates began to rise.

He made offers on a half-dozen homes. Of those, two have since been redeveloped into houses that will sell for several times more than his offers.

“It didn’t seem like I was competing with people of my own demographic, with other first-time homebuyers,” said Thomas, who eventually bought a fixer-upper in Kenton last year. “It was like, what can I do to get my foot in the door here?”

In competitive bidding, builders or their intermediaries usually have a leg up on buyers who are relying on bank financing. For the sellers, cash usually means a quick, guaranteed close.

“With cash, you’re going to bypass any underwriting and appraisal issues, and you’re going to bypass a lot of the inspection contingencies,” said Grippo, a broker with Windermere Stellar. “It’s hard to compete.”

And while most buyers are limited by an appraised value of the home as it stands, builders can dig into their expected profit margin on the sale of a new, more expensive home.

“It may be a smart idea to scrape a $450,000 house, even though it’s a perfectly livable residence, because somebody would buy a new one for $1.2 million,” said David Coburn, a Portland home appraiser with experience in redevelopment work.

Builders say their projects are helping to revitalize neighborhoods. Most of the homes they buy are in poor shape — sometimes outright uninhabitable.

“If a home was in good condition with a functional floor plan, it wouldn’t be a candidate for demolition,” said Randy Sebastian, owner of Renaissance Homes. “It would be a candidate for resale of the home. It doesn’t make sense for developers to tear down every home in Portland.”

Not every home, but many homes. (Story continues below.)

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Janice Smith, a Portland real estate agent, bought a dilapidated house on Southeast 30th Avenue in mid-2007. She replaced much of what was left of the house — the framing, the siding and the roof — and rented it out for three years.

Last year, she put it on the market and received six offers — one from Renaissance at her asking price, and two higher bids backed by a mortgage. Figuring appraisal would undercut the highest bid, Smith talked Renaissance’ agent up to the second-highest bid and took the cash offer.

Renaissance bought the house in May for $283,000. They’ve since built two homes on the property, the first of which sold for $479,900.

“I was just stunned when a month later the house was gone,” Smith said. “It just surprised me that the land had more value than with a house on it.”

Today, most builders and their agents are largely bypassing the multiple listing service — the database where real estate brokers publicly list homes for sale — and appealing directly to homeowners in hopes of securing properties before they go to market.

Chris Baird, co-owner of Dilusso Homes and Cabinets, said he hasn’t bought a publicly listed home since July.

Like other homebuyers, he sees a lack of inventory in the public listings. But he says he gets calls daily from property owners who don’t want to go through the trouble of fixing up and listing a run-down house.

“We’re not worried about the condition of the property,” Baird said. “We’re buying stuff with collapsed sewer lines, totally dilapidated, totally in need of revitalization.”

— Elliot Njus