In the market for a new home? You’d better have some serious cash on hand. As fewer people rely on financing to buy their homes, sellers are choosing buyers who offer to pay in cash.
“When you have multiple offers, the cash buyers are typically going to move to the front of the line and have the advantage of buying that home over the buyers who are relying on financing,” explained Daren Blomquist, Vice President of RealtyTrac.
According to new RealtyTrac data, a record 43 percent of home sales this year have been all-cash deals.
“It is surprising to see these buyers who are living in the properties somehow coming together with the cash … to buy these homes,” said Bloomquist. “I think they're getting creative, they realize that cash is king. If they're going to beat out other offers on the property and win the bid, they're going to need to come up with cash.”
For many first-time home buyers, that complicates the process of looking for a new home. Even if buyers aren't stymied by tougher lending standards and higher interest rates, they often don’t have enough liquid assets to purchase a home outright.
Karl and Stephanie Baxter have put in 12 offers around Atlanta in pursuit of their first home, only to be priced out by all-cash buyers. The last home they tried to buy fell through because the sellers said they were looking for a cash-only offer.
"We've almost gotten to the point where we have given up, but we still look around in the hope of finding our first home,” said Karl Baxter, who is a pilot for Express Airlines in Atlanta.
His wife says that they have lowered their expectations as to what kind of home they are looking for, and even lost out on city incentives for first-time home buyers because the offers expired before they could find a seller to accept one of their home bids.
"Now we are just looking for anything, as long as it is a safe neighborhood," she said.