I have noticed the trend in my own business-- more cash deals. The National Association of Realtors recently published data indicating 32% of homes bought in the US during January 2011 were cash buys compared with 26% a year earlier. I am writing up a cash deal now that started out as one that would be lender financed. Why is this happening more often?
We have discussed weak appraisals in the publication in previous postings. Prices remain weak and lenders are using foreclosures in compararable data. The banks want to be sure they will have adequate collateral and are using discounted foreclosures in their assessment of worth.
Sellers are more motivated by cash deals for this very reason. The seller is not held up by appraisals causing deals to fall through. Therefore, sellers are more motivated to take less money for the increased likelihood the deal will be completed.
Some condominium buyers cannot get financing as a result of falling short of Fannie Mae and Freddie Mac requirements. These agencies will not guarantee mortgages in condo communities where 70% of units in a development are not owner-occupied. Fannie and Freddie guarantee most of the mortgages issued in the US.
Other potential borrowers do not want to be subjected to the onerous process of being approved by a lender. Banks tend to want to look into every aspect of a potential borrower's finances; there are many pages of paperwork to be filled out; and people who can afford to self-finance sometimes decide to opt out of this process.
Many distressed properties do not even qualify for financing because they are in such poor condition.
Real estate investors are beggining to be more active, in my opinion, and the cash only incentive allows them to buy more cheaply. In addition, the investors do not want to have to worry about interest and payments if they can avoid it.
If you are thinking of selling or buying a home, or require more information, please feel free to contact me.
Michael Friedman
Realtor, Certified Distressed Property Expert (CDPE)
Lang Realty
561-247-3550
http://michaelfriedman.rmlsfl.mlxchange.com/?Page=7395217 <--property search link to cut and paste into your Web browser
Boca Raton FL real estate for sale and surrounding areas including real estate properties for sale in: Belle Glade, Boca Raton, Boynton Beach, Bryant, Canal Point, Dania, Deerfield Beach, Delray Beach, Fort Lauderdale, Hallandale, Hialeah, Hobe Sound, Hollywood, Indiantown, Jupiter, Key Biscayne, Lake Harbor, Lake Worth, Loxahatchee, Miami, Miami Beach, North Miami Beach, North Palm Beach, Opa Locka, Pahokee, Palm Beach, Palm Beach Gardens, Pembroke Pines, Pompano Beach, South Bay, West Palm Beach, Lang Realty
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I agree with you there, Real estate investors are beggining to be more active, in my opinion, and the cash only incentive allows them to buy more cheaply. Well said. And that is their strategies to get more properties.
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