Of course, most of you are aware of the current turmoil on Wall Street and the "relief package" that congress and the President are now fighting about. Who knows how it will turn out. However, most of the economists that I have watched on all of the news channels are stating that this is a "credit crisis". In other words, both companies and consumers cannot get the credit they need to help grease the wheels of the economy. Grease like loans to buy cars, business loans to expand, mortgages for new home purchases, and the construction loans for developers so they can start the homes in the first place. And this goes on and on. Of course this has scared many people, even though many of the recent stock market losses are paper ones.
What this does in our market, and in many others around Florida, is to give greater importance to those buyers who pay for their real estate purchases with CASH. Many of my customers are looking for second homes where they can escape the snow and cold of northern winters. A large percentage of these buyers pay in cold hard cash. Part of this is due to the fact that the homes they are buying are much more affordable and lend themselves to cash deals. Another component is that many of the buyers also have homes up north that they own free-and-clear, and when necessary, they can pull out a modest amount of equity to buy a home down here. Also, my foreign investors tend to pay cash since the British pound and EURO are currently worth more than the US dollar. I have one English investor that has bought two properties in the past months and paid for both with cash!
Of all the homes that I have sold in the past calendar year, only 3 that I can think of, were financed. The others were cash deals, and ranged from $55,000 mobile home to a $260,000 large home on an acre lot, and everything in between. It used to be that sellers did not care whether the money came from the buyers' pockets or the banks' vaults. But with the requirements for financing a home getting stricter by the day, those buyers who can offer cash-on-the-barrel, are being courted agressively by REALTORs and they sellers.
Sellers need to price their homes correctly and attractively so that the cash buyers will be drawn to them. They also need to make sure they are in tip-top condition. Why is a cash buyer going to buy your home for X dollars, when they can get the same home down the street that is in better shape for 10% less? Sellers also need to be willing to bargain fairly, since the wait for a financed deal may be a very long one and likely full of hurdles the buyers may not be able get over. As an example, I just sold a foreclosure home that was listed at $100,000. The bank had received a full price offer with a financing contingency. The bank knew what the lending market was like, and instead accepted my buyer's $80,000 cash offer. We closed in less than two weeks. Much quicker than a short sale.
Sellers should keep in mind that when they deal with cash buyers, often they do not have to worry about the results of surveys, credit approval, appraisals, etc. Those are big concerns and any one of the can wreck a deal. With cash, most of those will disappear. So sellers, always take cash offers seriously, even if eventually you are forced to turn them down. Also be aware that often cash buyers do not like the tedious waits of a short sale. My investors are somewhat insulted when they make a fair cash offer and then it takes the bank a month to respond. So keep that fact in the back of your minds.
For buyers who can pay cash, they can in the "catbird's seat". Though they cannot call all the shots, they can bargain from a stronger position. Since credit is tight now, cash offers can look mighty tempting to sellers, especially if their homes have been languishing on the market for months, or now, for years. If you offer a fair price, reasonable terms, and a quick closing you will often be surprised at the concessions the sellers may give you.
So, for all concerned, "Cash can be King" while credit remains tight. Buyers can get some good deals, and sellers can move properties that they would otherwise be shackled to. Sometimes a "sure thing" can be comforting. Food for thought as we move through this bumpy housing market.
Contact me if I can be of further service to you. You can call me at: 813-783-4444 or e-mail me at: firstname.lastname@example.org
I also invite you to visit my webpage at: www.jelwell.century21bnr.com where you will also find links to my Florida Real Estate Blog and my Zephyrhills 55+ Bulletin Board.