Home News Brokers Say Cash Was Always King. Now It’s God.

Brokers Say Cash Was Always King. Now It’s God.

by admin
0 comment

From left: Jared Barnett, Eugene Litvak, Ryan Kaplan (HIG, Compass, Design Recipes, Getty)

They say that cleanliness comes close to godliness.In real estate, there is nothing neater than an all-cash transaction.

Recently, the number of cash buyers in the housing market appears to have increased as rising mortgage rates and market volatility paralyzed competition and increased the chances of getting discounts.

“For those who still have the means to buy and the liquidity… they are in pretty good shape,” said Corcoran broker Ryan Kaplan. “I have seen shocking changes in interest rates knock out buyers I have worked with.”

Cash is always king. Transactions are less likely to go wrong as they do not require lender approval. It can also be completed much more quickly than a mortgage, which can take weeks for processes such as review and underwriting.

However, mortgage interest rates 21-year high And with winter approaching, cash is taking an even bigger premium.

The motivation for sellers to accept lower cash offers is to avoid starting over after a few weeks as offers with financing fail. With valuations increasingly below asking prices, lenders are hesitant, tanking deals for weeks.

Compass Broker Eugene Litvak said: “The last thing you want to do is get a deal done. Deals will collapse and you will have to reopen your listings in the winter when interest rates are rising.

Sure, mortgages are still approved, and offering cash doesn’t guarantee a discount. Douglas Elliman’s Doreen Courtright said she hasn’t noticed an increase in cash buyers.

“I know from experience that if you say to a seller, ‘Well, this offer is all cash,’ they will say, ‘It doesn’t matter. says Courtright. He said.

Brokers with more cash buyers say stock market volatility is weakening competition. Some buyers have an incentive to invest in real estate as a hedge against inflation and uncertainty, while others have already wiped out their down payment.

“The two executives I had in mind belonged to some of the more important operators in the crypto world and had to freeze their plans,” he said, reinvesting in the stock market. Select.

“Sophisticated and astute investors know that being able to invest that cash elsewhere is more profitable than keeping it locked at home,” he said.

Litvak said it makes sense for sellers to offer cash offers that are 2-5% lower than conditional offers. Sheila Trichter, a broker at Coldwell Banker Warburg, said her cash client recently beat out a $35,000 higher conditional offer. According to multiple brokers, discount rates vary by seller, and one important factor is the seller’s motivation.

Compass broker Jared Barnett said three of the four deals that have closed since Labor Day are all cash.

“For some of our listings, we receive multiple bids, but it’s usually the all-cash buyers who make these offers,” he said.

You may also like