Cash is King! We have all heard this saying but how close to the truth is it? Do sellers ALWAYS accept cash offers? Can you compete with Cash Buyers? Let’s dig into this and find out just how cash is viewed in our market.
What Amount of Home Buyers Pay Cash?
Looking at home sales for the year (2021) in Fort Collins there have been a total of 555 cash sales that were accepted by sellers. That amounts to 19.2 percent of the market being cash offers. This is an increase over previous years. Nationally in the spring of 2021, 25 % of home sales were made with cash. That is a notable increase over 15 % in 2019 and 20 % in 2020. Based on this information from the Council of Residential Specialists, it appears that buyers that have the ability to pay cash for a property are. This has the potential for getting their offers accepted over those buyers that must get financing. Clearly, there are more cash offers being seen by sellers.
Advantages of Cash
What are the advantages to a seller to accept a cash offer over an offer that requires financing? One of the major advantages of an all-cash transaction is speed. Buyers with cash in hand don’t need to wait for financing that could require about 30 days to close. Cash buyers can also wave some contingencies such as appraisal or the sale of a previous home. Sellers who want a quick closing may find this very appealing. Other sellers may feel rushed by this and not find it quite as attractive. Not having the requirement of an appraisal, may certainly be appealing. Especially if the offer that the seller has received is significantly over asking.
So Can You Compete With Cash Buyers?
Just because a seller has received a cash offer does not mean that it is the “best” offer. In working with cash buyers, I often need to remind them not to get cocky. Remember that proof of funds will need to be provided. If your funds are tied up in your home and you will need to sell that in order to purchase your offer may not be as attractive as someone who is getting financing. As a cash buyer you need to understand just how competitive the market is. Just because you are paying cash does not mean that you will be able to purchase the property for a lower price. If you plan to pay cash for your purchase it is important to know how liquid the funds are that you will be using to purchase. How long will it take to have that cash in hand?
Planning to Compete
Sellers do NOT always accept cash offers. You can write an offer that can be seen as just as attractive to the seller as a cash offer. It will be important that you are working with a strong, well known, local lender. You must also recognize the importance of being pre-APPROVED! There are ways that your lender can have you appear like a cash offer even when you are getting a loan. There are tricks out there. Be careful not to misrepresent yourself. Remember that a good solid offer, well written that is offering an attractive amount, getting a loan from a local lender can get accepted over a cash offer.
Make sure that your agent finds out what is important to the seller and be sure to include that in your offer. It may take a tiny bit of luck too, but you can get your offer accepted. Contact Us today so we can work together to create a plan of attack. This will allow you to be in the most competitive position possible regardless of your financing.