What do you think the chances are of selling your home to a cash buyer?
You may be surprised to hear that according to the National Association of Realtors, 27% of the homes sold nationwide in September were bought by cash buyers. And even if you just look at California, the figure is still 24%.
Where are These Buyers Coming From?
1 in 4 buyers sounds like a pretty big percentage, especially when so many people are struggling with affordability. So who are these people who buy homes for cash? You may think that they are probably investors looking or a good deal, but that’s not necessarily the case.
According to the National Association of Realtors, cash buyers can be separated into three groups, investors, Second home buyers, and people who are using the proceeds from the sale of their present home.
Investors fall into three categories – Corporate Investors with a growing portfolio of rentals, Small Investors with one or two rentals, and Short-term Investors who buy, fix and sell homes for a profit.
So when a home sells for cash, its just as likely that it will be bought by somebody more like you. After all, it’s very likely that anybody who bought a home twenty or more years ago will have built up a lot of equity.
Now it used to be said that you would be better off buying a home with a mortgage and investing much of your cash elsewhere. But buying a home with a mortgage at interest rates of 7% is not so appealing if you have the means to buy for cash.
Now it’s still a fact that most home purchases still involve financing, but it’s interesting to note that most of the cash sales occur at the lower end of the market (mostly investors) and the high end (affluent purchasers). So for most East Bay home sellers, a cash buyer is unlikely.
If you are planning a move, and you are moving to a more affordable area, maybe you will be a cash buyer, depending on where you are moving to. But you most likely won’t have to be concerned if you plan to finance your next home. As noted above, Most home purchases still involve some financing.
If you are thinking of making a move in the near future, now is the time to start planning. Call Bernard or Michelle and we’ll be happy to advise on any cost effective improvements that will help your home sell quickly and for the best return on your investment.