Financing-dependent home buyers need to take some crucial steps in order to successfully compete with the cash buyers who currently dominate in the U. S. residential market.
Cash home sales during the 2014 first quarter accounted for 43 percent of the total sales for the three-month period, according to a recent research by RealtyTrac. This slice for cash sales stands at its highest level since the analytics firm started monitoring this particular market gauge in 2011.
Significantly, this benchmark is even higher in several local markets, including Sarasota where 65% of the total sales during the first quarter were accounted for by cash buyers. The city landed among the top five U.S. cities with the highest cash home sales.
Others in the list included several other Florida cities, namely: Cape Coral (74%), Miami (67%), Palm Bay (64%), and Lakeland (62%). In a separate estimate based on Florida Realtors Association figures, cash sales in Manatee accounted for an average of nearly 50% of total sales in single family homes in the first quarter and peaked at 52% in March.
Moving forward, market analysts expect the dominance of cash buyers to continue. They note, for one, that significant buying interest is coming from snowbirds in the northern states. Their area’s severe winter in the past year is prompting them to seek a second home or permanent residence in the South. Notably, many of these prospective cash home buyers are retiring baby boomers who have already accumulated wealth and are therefore uninterested in buying homes on credit.
Buyers from emerging markets in Asia and Latin America, eying safe havens to park their funds, also contribute to the surge of cash home buying in the U.S. Likewise remaining as a factor is the country’s big institutional investors which have been gobbling up residential properties in recent years for conversion into rentals. Although a pullback from these institutions has been noted recently, small individual investors are now making their presence felt, drawn mainly the attractively priced home foreclosures.
RealtyTrac data show that about 25 percent of the first quarter of 2014 cash sales were deals in foreclosed homes or those in the process of foreclosure which are typically sold below market value. During the quarter, the analytics firm placed at $207,668 the average price that cash buyers paid, a 13% markdown from the average estimated value of the properties sold in the three-month period.
Buyers eying home purchases on credit can beat those who got the cash, though it will take some extra efforts. Some emotional appeal can help through an introduction or cover letter to the seller. The buyers’ agents can be helpful particularly in communicating to sellers the ultimate intent of the purchase.
This works typically for sellers who have sentimental attachment to the property. What they may prefer are buyers who’ll occupy the residence and take good care of it rather than investors who’ll rent the property out or those who’ll flip the property later for a profit.
Buyers can also ask their agent or a mortgage professional to provide the seller with certain financial information about the buyers’ offer. A pre-approval letter from a buyer’s lender would also be helpful as it verifies that the buyer is well-qualified for the purchase.
SARASOTA, FLORIDA, October 7, 2019 – Property values of communities in the Sarasota-Manatee region now face lesser threat from neighborhood eyesores brought about by abandoned, foreclosed homes. Known in the real estate trade as zombie foreclosures, these properties have shrunk significantly in the region. According to an August report of ATTOM Data Solutions, abandoned […] more>>