Cash is King
With home affordability at record highs, the vast pool of investors and foreign buyers picking up real estate bargains has arrive at all-cash purchase record numbers, and some real estate specialists predict that number is going to keep growing.
Existing-home purchases were made up of an record high 33 percent of all cash buyers during February 2011, as reported by (NAR) National Association of REALTORS®. The ratio of cash transactions could reach as much as 40 percent by year end, states one research director with a Washington based company that conducts 3,000 monthly surveys real estate professionals .
With mortgage lenders only seeking to lend to prime buyers in credit scores terms,. Consequently, there's a short supply of traditional real estate buyers.
However it’s not only domestic investors picking up bargains: A lot of these cash sales are also originating from an increasing number of intercontinental buyers. Around 55 percent of intercontinental buyers paid all cash for homes they are buying in the U.S., according to a NAR April 2010 report.
The Cash Buyer Benefit?Cities where almost half of all realty purchases were paid in cash include Detroit, Las Vegas, Miami, and Phoenix, where prices have plummeted considerably while rates of foreclosures remain high.
Foreclosures along with short sales added up to 59 percent during 2010's cash sales, in an article by Morgan Stanley, Investors buy a house at a cash discount, and almost immediately flip it to a first-time buyer who's getting a mortgage, because didn't have the ability to purchase it at a foreclosure sale..
Lenders are increasingly rejecting mortgage applications onr foreclosed properties due to appraisals being too far under the contract amount or the escrows take way too much time to close.
Along with tougher lending standards, cash transactions can give buyers added leverage plus allow the buyers to close escrow on properties more quickly. If a property is listed at $100,000 and a purchaser offers $90,000 all cash, the bank will opt for the cash. in ninety percent of the time.
Article by Gene Wright, Apr. 12, 2011
Buying Real Estate
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