Cash is King...Not Always

 

Most of us have heard the statement "cash is king", when referring to a real estate purchase.  Listed below are the advantages of paying all cash to purchase a home. Be sure to read further, though, to see why this may not always be the case.

 

• The seller may reduce the price for those who pay in full up front.

 

• All-cash purchases streamline the home-buying process: No loans means less paperwork and no delays for mortgage approval.

 

• Cash buyers can save money on closing costs, bank appraisals, mortgage applications and fees, title insurance, and so on.

 

• Cash purchases eliminate the risk of loan denial.

 

• Cash buyers pay much less for their homes in the long run: No loans means no interest.

 

• Cash buyers never have to worry about losing their homes because they can’t afford to repay their mortgage loans.

 

• Cash buyers gain full, immediate equity in their home.

 

• Financially and emotionally, paying with cash benefits the home buyer.

 

• Sellers often show preference to cash buyers

Home sellers generally prefer quick, smooth sales. They know that even buyers who have been pre-approved for mortgages might be denied by the lender later on. Sellers are often willing to reduce the house’s price for cash buyers.

 

•  Cash purchases avoid the risk of low appraisals

 

 

 

Home appraisals are notoriously fickle. Lenders determine a home’s worth by weighing it against comparable sales — other homes in the neighborhood that may have sold at low prices for unknown reasons. A low appraisal could lead the lender to reduce the amount of the loan offer, even after seller and buyer have agreed on a price. If the loan amount comes up short, the buyer often cannot afford to buy the home. All-cash buyers sidestep mortgage applications, avoiding the need for a potentially deal-breaking home appraisal.

Cash is a powerful tool when buying real estate, however, cash buyers should know that making an all cash offer does not guarantee it will be accepted or that the seller will work with you.



One reason that an all cash offer would be rejected in favor of a financed offer would be if the seller receives a cash offer that is significantly lower than the asking price, the seller will often choose a higher offer even though it involves financing in this case.  Many homeowners need every dollar that they will net from the sale of the home and if they feel that the difference between the cash offer and the financed offer is worth the risk, they will often go with the financed offer.



Nancy Puder is a real estate broker in Arroyo Grande, CA. with Nancy Puder & Associates. If you have any questions or concerns regarding your own property, contact Nancy at (805)710-2415 or email Nancy@NancyPuder.com.  You may also go to Facebook.com/Nancy Puder Realtor and "like" her page to access other real estate related articles.

Home Prices Dip Slightly in June

Home prices dipped slightly in June but homeowners should not be alarmed as this is just part of the recovery process. The real estate market adjusts itself every 3 weeks and is affected by several other economic factors like job growth, wages and the amount of other competing homes on the market.

 

The good news is that this is definitely a great time to buy or sell real estate. VP and chief economist at C.A.R. Leslie Appleton-Young, commented that “Home prices are finally increasing at a healthier pace, and the smallest year-over-year price gain in more than two years suggests that prices are stabilizing...Last year’s frenzied market of multiple offers, which drove sales prices above listing prices, has tapered off as the sales-to-list price ratio has dropped to a more normal level at nearly 99 percent, which signals a return to a more balanced market.”

 

Here are some statistics you may find interesting..

 

• Statewide housing inventory edged slightly higher in June, with the available supply of existing, single-family detached homes for sale increasing from 3.6 months in May to 3.7 months in June. The index was 2.9 months in June 2013.  The index indicates the number of months needed to sell the supply of homes on the market at the current sales rate.  A six- to seven-month supply is considered typical in a normal market.

• The statewide median number of days it took to sell a single-family home also rose in June, up from 31.6 days in May to 33.9 days in June and up from 27.8 days in June 2013. 

• Mortgage rates dipped in June, with the 30-year, fixed-mortgage interest rate averaging 4.16 percent, down from 4.19 percent in May but up from 4.07 percent in June 2013, according to Freddie Mac.  Adjustable-mortgage interest rates in June averaged 2.40 percent, down from 2.43 percent in May and down from 2.60 percent in June 2013.

 

Nancy Puder is a real estate broker in Arroyo Grande, CA. with Nancy Puder & Associates. If you have any questions or concerns regarding your own property, contact Nancy at (805)710-2415 or email Nancy@NancyPuder.com.  You may also go to Facebook.com/Nancy Puder Realtor and "like" her page to access other real estate related articles.

 

 

China Leads the Way in U.S. Real Estate

Chinese buyers have become the fastest growing segment in the real estate market, followed closely by the Canadian buyer.  Chinese buyers have also become the largest source of foreign cash in the U.S. real estate sales in the United States.

 

Over the past several years, American real-estate markets have been viewed alternately as a safe haven and a bargain amid concerns over geopolitical instability or unsustainable asset values abroad.

 

U.S. real-estate also continues to be popular thanks to the dollar’s weakness against some currencies, though the currency advantage has dimmed somewhat for Canadian buyers that had been particularly aggressive property buyers in the U.S. in 2011 and 2012. Some agents say that American higher education is also a top draw for some trophy-property buyers.

 

Steve Brown, president of the National Association of Realtors (NAR) said that “Foreign buyers are being enticed to U.S. real estate because of what they recognize as attractive prices, economic stability, and an incredible opportunity for investment in their future. "

 NAR estimates that 35% of Chinese buyers selected homes in California. Around 40% of Canadians bought homes in Florida, while 23% of Canadians bought in Arizona.

 

China was the largest source of transactions on a dollar basis, and it represents the fastest growing buyer segment. But Canada remained the largest share of clients. Canadians accounted for 19% of property buyers last year, down from 23% in the previous year. Chinese accounted for 16% of buyers, up from 12%. The NAR survey includes buyers from Taiwan and Hong Kong in that tally.

 

Nancy Puder is a real estate broker in Arroyo Grande, CA. with Nancy Puder &Associates. If you have any questions or concerns regarding your own property, contact Nancy at (805)710-2415 or email Nancy@NancyPuder.com.  You may also go to Facebook.com Nancy Puder Realtor and "like" her page to access other real estate related articles.