Cash has always been queen—and in today’s housing market, that’s never been more true. According to the National Association of Realtors monthly survey of real estate agents, cash offers in March for listed homes comprised about 28% of sales, up from 25% in the month prior and 23% a year ago.
57% of buyers’ price offers in March were above the list price (48% in the prior month). Half of the buyers had made at least two prior offers and lost before succeeding on the third try, according to the report.
And with an average of five offers per home, cash offers tend to stand out. Sellers want to know that the deal isn’t going to fall through at the end of an already-long process.
“Rising mortgage rates make a home purchase less affordable for middle-income homeowners, while wealthier households who can afford to make a cash offer won’t feel the impact of rising mortgage rates,” Gay Cororaton, a senior economist who directs housing and commercial research for the National Association of Realtors, told Yahoo! Finance.
Cash offers became more common across the country during the pandemic, the article said, and made “already hot markets even hotter.” In Palm Beach, Florida, 55% of closed sales in February were all cash, according to the Miami Association of Realtors.
Recently, fintechs and other companies have begun offering cash programs to help buyers compete, offering an up-front cash buy while financing a conventional mortgage for the buyer on the back end.
Lower.com recently launched its cash offer program HomePass™, available for both first time homebuyers and current homeowners in select markets. HomeLight Homes has a similar cash offer program in which buyers gain financing that is presented as all cash to the seller. However, there’s a fee involved. Depending on the company, the fee can range anywhere from 1% to 3% or more, the article said.