Cash Is King.....For Now

As I visited numerous open houses over the weekend, I continue to hear a common recurring theme. There are plenty of cash Buyers! I always tell people, everyone is a Buyer and Seller….it just depends on price and service.

A great deal of properties being purchased are done so by investors. They are taking advantage of low prices coupled with low interest rates that this country has ever seen. Period! Why would you not want to be an investor or a first time home buyer? Do you doubt that inflation is coming? What this has done for the time being is create an opportunity for those that want to seize it. It seems like many investors understand where we are in the economic cycle to have them create a buying frenzy. Now I’m only speaking in generalities, much of the country elsewhere is not necessarily experiencing what we have been in Southern California. This leads us to the Buyers themselves. Traditionally, the more experienced will have cash and as you know, cash has been king. Representing a cash buyer eliminates financing contingencies resulting in a quicker close for all parties. This does not mean that other buyers that need financing are less qualified, although traditional financing does lengthen the process. Traditional financing requires time, appraisals, and underwriting before a loan can be issued. There have been more foreign investors that attract listing agents because foreign nationals circumvent the financing. Countries such as China, Taiwan, Europe and the Middle-East all have been pouring their money into the real estate market as a safe bet. Most banks and lenders require a social security number, credit and employment which foreign nationals may not have making it easier to go with an all cash buyer.

According to David Kim of Carrington Mortgage, “Most cash offers have a 15-day escrow period. We pledge a 25-day loan closing so we are competitive when it comes to quick closings.”

Although cash seems to be the proverbial king, lenders are now making stride to keep pace with shorter closings geared toward the majority of Buyers.

David Kim can be reached at (626) 252-5709 or david.kim@carringtonms.com