Many Buyers these days want to find out how best to have an edge in the home buying process, especially during the hot spring market.
Research by the National Association of Realtors on cash sales shows that about 30% of residential sales, in fact, are cash transactions, and, especially among investors and international buyers, more than 70% of properties are bought outright.
If you can afford to buy up front, the advantages are many:
Sellers often prefer cash buyers
Sellers appreciate a smooth closing process with no worries about lender delays. If they have a choice between a cash offer and one tied to a lender they will more than likely choose the cash one. If you’re buying with all cash, you have greater negotiating power on price, closing time, repairs and more. Sellers are often willing to reduce the house price for cash buyers.
Cash purchases don’t need appraisals
We’ve talked about the appraisal process in a previous blog. Lenders determine a home’s worth by weighing it against comparable sales — even those that may have sold at low prices for unknown reasons. If the loan amount comes up short, the buyer often cannot afford to buy the home. All-cash buyers don’t need an appraisal, thus taking that potential deal breaker off the table.
Cash purchases are money & time savers
It’s clear that cash purchases carry lower costs. Mortgage interest on a 30-year loan can double or triple the original purchase price. Closing costs also are significantly lower with cash purchases. Cash purchases also save buyers valuable time, eliminating the need to research lenders, appraisals and deal with unexpected paperwork.
Owning outright cuts down on stress
All-cash purchases bring a sense of security. Owning your home outright means never having to worry about covering your mortgage. In the case of job loss or injury, full ownership eliminates the risk of losing your home to foreclosure, and you will have excellent equity in the house. In case of financial emergency, you can draw on that equity for quick cash.
Figure out how to pay in cash
Buying your house with cash might seem like an impossible task, but there are ways to achieve this:
- Set aside unexpected work bonuses, stock windfalls or inheritances.
- Put this cash in a long-term CD to earn interest.
- Once you have the cash on hand, look for a house you can afford without borrowing extra money.
- If you can, consider moving to an area where home prices are likely to be lower.
- Stay on track and avoid the temptation to spend money.
