- In April 2021, 25% of all home sales were all-cash deals, according to the National Association of REALTORSÂ® (NAR)
- One year ago, all-cash offers represented 15% of total home sales
All-Cash Deals More Attractive to Sellers than Financed Deals
In a real estate market with -21% fewer homes to sell than there were just one year ago, competition for those homes is stiff.
Such a low-inventory real estate market is defined by bidding wars.Â How can sellers decide which potential buyer will become â€œtheâ€ buyer?Â Often, sellers choose the buyer who put in an all-cash offer for their homes.
All-cash offers appeal to sellers for two reasons:Â thereâ€™s less chance of the deal falling apart and all-cash deals usually close faster than mortgage-contingent offers.
Arlene Gonnella, an agent with New Jerseyâ€™s Weichert Realtors,Â said, â€œIt (all cash offer) makes a stronger offer in this market where sellers are faced with many competing offers.Â Sellers are able to know with certainty they have a done deal.â€
All-Cash Offers Donâ€™t Always Mean All-Cash Deals
Many all-cash offers do not translate into all-cash deals.Â Some cash-offering buyers ultimately finance the home.
Even if buyers have all the cash, â€œInterest rates are fabulously low,â€ said a San Francisco Compass agent.Â â€œEveryone would like a mortgage so they can keep their cash and do something more productive with it.Â Itâ€™s just a mater of, â€˜How do I win in this competition?â€™â€
PropTech Firms Can Help
Â HomeLight,Â a prop tech firm and lender, is a resource some buyers enlist to â€œhelpâ€ them make all-cash offers.Â HomeLightÂ confirms that their clients can qualify for a loan, approves the buyer and underwrites the loan for an all-cash offer.Â Its in-house valuation team evaluates the home and then makes an all-cash offer on behalf of the buyer.Â If the offer is accepted, HomeLightÂ buys the home, and then holds the home and title while the buyer obtains traditional and secure home financing.
Currently, HomeLightÂ operates in Texas and California with plans to scale nationwide.Â The company charges a fee of 1% of the purchase price for its service.Â If the buyer uses another lender to obtain that traditional financing,Â HomeLightÂ charges a fee of 3% of the purchase price for its services.
Vanessa Famulener, vice president of HomeLife Cash Close,said, â€œYou shouldnâ€™t be penalized just because you donâ€™t have a massive amount of liquidity.Â We want the average person who is well-qualified to be able to compete with someone with very deep pockets.â€
Thanks to CNN Business. National Association of REALTORSÂ®, Compass, Weichert Realtors and HomeLight.
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