Years ago, with lending regulations not as strict, sellers tended to lean heavily towards cash buyers. There was less risk between the loan approval process and the appraisal. Because of this, cash buyers had the upper hand. They could purchase homes for significantly less than the list price. But times have changed, and cash isn’t as big of a deal as it used to be. Here’s why:
- Less risk on the loan process: If a Buyer has a pre-approval from a well-known direct lender (such as a Wells Fargo, Bank of America, or Chase), then there is a high probability that it will close successfully.
- The loan process doesn’t take as long as it used to: Nowadays, loans can fund between 30-45 days. Way back when, it could take much longer, thus cash was more desirable. Many cash buyers want to close in around 14 days. But now most sellers are willing to hold out a few more weeks if it means collecting substantially more.
So when is cash helpful? Cash buyers have the upper hand when there is a property that can’t be financed. This includes condos where the HOA is in bad financial shape or on tear downs where lenders do not want to take the risk. As a matter of fact, more cash buyers are now taking out loans because they are taking advantage of the low interest rate.
Now things can change. As the government regulators impose more rules, disclosures, and regulations (such as the recent disclosure changes), there may be a shift in desirability for cash buyers. Only time will tell. But in the meantime, rest in peace Cash is King, as for now you are dead.
Photo provided by “Gold Dollar Sign with Crown” by vectorolie.
No responses yet