A report in DS News quotes a study that claims 38% of all homes bought in 2011 were financed by cash, not mortgages. Tight lending criteria is likely one of the causes, but investors are also looking for ways to make their money yield better returns, too. This trend is expected to continue for the near future. And right now we’re seeing true record low mortgage rates (sub 4%)!
My own experience is that there are a lot of cash buyers who want to be owner-occupants. It’s not unusual for me to see cash offers on homes up to the $140,000 price point, so there’s a lot of competition for homes in ‘move-in’ condition.
A recently released Realtor Confidence Index for November 2011 also indicated that 28% of home purchases were cash financed. This report was based upon results obtained from just over 3,000 Realtors nationwide and is conducted monthly by the National Association of Realtors Research Division.
Please remember one very important thing. A cash offer does not guarantee that you will be the successful bidder in multiple offer situations. While it takes some uncertainty out of the equation for the seller, many sellers are still looking at the bottom line. Depending on the margin between a cash and financed offer, they may take a ‘cleaner’ and lower priced cash offer or they may take the higher priced mortgage offer knowing that it will take up to 45 days to close.
Everybody wants a deal but if you’re seriously underbidding on homes that have been on the market less than a month, you’re not going to be in the game.
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