Have you every heard the phrase “Cash is God?”. Yes, this still applies literally anywhere in the world and in any market. Which makes it hard for home buyers who’s looking to get traditional loans to compete with. This holds true when there is not a lot of inventory in the market.
Why does it look like it is happening now but not in the past?
Well, it just seems that way because of the hard restrictions of lending from our banks today and because of the tight inventory. Cash buyers have been there all along except that they used to be able to get lending much more easier so they do something else with their cash instead. Now with low inventory in hot markets, these cash buyers want to be accepted with their offers right away knowing that cash is god!
In which markets do they come in the most?
From studies, it lots as if they are more in the Florida and Midwest markets. Miami looks like the front runner in the largest share of homes sales with cash buyers with around 60% of cash buys in total sales.
Where are these cash buyers coming from?
Most of these cash buyers are stemming from first time home owners, baby boomers, and wealthy individuals who are buying second homes either for investment or vacation properties. The influx of foreign buyers are also coming to the U.S. from all over the world in big cities such as New york, Los Angeles, Las Vegas, and Miami.
How would traditional buyers with no cash compete with cash buyers?
First, make sure you are pre-approved by your lending bank. Then have at least 20% of down payment with good to execellent credit. You have to be well prepared and understand why sellers are selling? Maybe you can make the offer sweeter by for example, giving them a longer period to move out because they need it. Or not requiring them to fix some broken fixture that you noticed after final walk thru.