Cash is still king! All cash sales fall into many categories, the lower end of the market tends to have these types of sales. As such, it can be extremely challenging for the typical buyer to contend with the all cash offers, particularly if the market has a tight inventory. The question is who these cash buyers are and how can they be found? The answers to that and more are outlined below.
The reign of the cash buyer is strong due to a number of reasons. The standards of lending are extremely restrictive and in markets that have limited supply and high demand, the competition among buyers is pretty intensive. The thought is that if the payment is made in cash, it is a great advantage and it will attract the seller.
Where Is This Trend Customary?
This trend is occurring all across the nation. Though the ratio of cash sales is higher in many states (even the rural states that do not have housing problems), it tends to be more prevalent in the Midwest markets and in Florida. With approximately 65% of sales, a reduction from approximately 71% in 2012, Miami had the largest portion of buyers that paid cash. Tampa follows with 57.1% and Cleveland with 54.2%.
Who Are the All-Cash Buyers?
It can be said that they are not essentially institutional investors. Suffice it to say that they all made their purchases in the last twelve months and have left the market when the prices for homes increased. These all-cash buyers are the wealthy families that are purchasing vacation homes, the empty nesters, the baby boomers and the overseas buyers that are purchasing properties in areas like Las Vegas, New York and Miami.
How Does This Affect the Traditional Buyer?
As more cash buyers enter the market, it becomes more difficult for the traditional buyer to make offers on new listings Vancouver properties that get accepted particularly in the lower tier of the market where the inventory is limited.
A major real estate marketplace, Zillow did a study of the cash sales that were made in the top, middle and bottom third of home values. It was discovered that more than a third of the sales made on the lower priced homes in twenty seven of the thirty metros were all- cash. In fact in Miami, Detroit and Tampa, the top three in the top thirty metros, cash sales accounted for more than eighty percent of the lower tiered home sales.
The great news is that the number of homes that were bought with cash has decreased and this will help to even the playing field for lower income and first time home buyers especially in the South Granville real estate market.
How Does the Non-Cash Buyer Compete With the Cash Buyer?
To have the advantage in the Yaletown real estate market for instance, you have to be qualified to buy a home. It is best to have a job, have pre-approval, have a great credit rating and be able to make at least a twenty percent deposit. It is also best to make a very strong offer with no contingencies.
Last but not least, always try to sweeten the deal where possible on the new listings Vancouver. Find out what the sellers motivation is and use it to your advantage. Bear in mind that at the end of it all, a lot of sellers will be in no hurry to seal the deal and are simply looking for an honest, trouble free offer.