Even though the share of cash-buyers is seen to drop in most areas, it’s still 100% true that cash is still king, particularly at the lower end of the market. This makes it tough for the traditional property buyers to compete with the cash buyers, especially in this environment of tight inventory. So, you must be wondering who these cash buyers are and where they’re located. Real estate lending standards are extremely restrictive and there is intense buyer competition, specifically in markets with lower demand and not enough supply. Hence, potential buyers think that if they pay with cash, they can get to the front line and stay an edge above others in the competition.
This has become a trend nationwide and there are many parts of the country where the share of cash sales is higher. Reports reveal that in the first quarter of the year 2016, Miami had the biggest share of property cash buyers in the country, which accounted for around 70% of the total sales. Cleveland and Tampa have also seen a rise in the number of property cash buyers.
Few pointers to note if you’re considering cash purchase
Cash buyers usually get a discount
Until now, it was seen that sellers never cared about whether or not buyers are carrying cash or are financing. Whichever way it was, they only wanted the highest number. But the scene has changed now. As banks are again lending loans, it is much more troublesome and there are many obstacles to jump through. Hence, a person who can close the loan in cash will definitely get a price-based discount due to the surety of the sale. Realtors throughout the country report the ‘cash is king’ phenomenon and hence it is definitely getting famous.
Lower closing costs for cash buyers
Cash buyers can even save enough money on closing costs and you even don’t have to pay an attorney for the mortgage. Neither do you have to pay real estate taxes in escrow in advance nor pay an amount of $300 to $600 for a mortgage application including thousands in loan origination fees. You would even not require a $400 to $600 for an appraisal which is insisted by mortgage lenders these days. So, you can save on several costs which you would have to pay in case you paid through financing.
There’s no guarantee to getting a mortgage loan
No matter how good your credit score is, if you have not been familiar with the mortgage market for some time now, be prepared for a shock. Even though your finances may pass the test, the lender can pull the funding if the necessary home appraisal doesn’t reach the price which you have already agreed to pay. This is one of the biggest issue which acts as an obstacle to home sales this year. Hence, it is always better to be a property cash buyer.
So, in case you’re someone who is still wondering about whether to seek financing or buy with cash you should definitely go for the latter option after knowing the multiple benefits of the same.