If you are thinking of buying your own home anytime soon, then you had better get a pile of cash ready. It should be a huge pile. In the first quarter of 2014, all-cash deals of home sales skyrocketed to an all-high of 43%, according to information provided by RealtyTrac. You will really appreciate this growth when you realize that it was 19% all-cash sales back in 2013, and that was the highest since RealtyTrac started its recording of deals in the beginning of 2011.
Analysts have attributed this to two primary factors. One is the stricter lending standards that have been put in place. These lending barriers make it difficult to secure a mortgage and fierce competition among buyers. Another factor that favors the buyer carrying a bag of cash is the shortage of inventory, according to Chris Pollinger of the Southern California-based First Team Real Estate. And this seems to be the trend because in the words of Daren Blomquist, the vice president at RealtyTrac, even buyers who would normally opt for finance packages are now handing down cash, a strategy that makes them more attractive to the sellers.
He added that for buyers who have the cash ready, they just pay to avoid an unnecessary queue. It seems to be first cash, first served. It has to also be noted that there are better chances of closing cash deals quickly compared with other alternative methods of payment. For buyers who stick to financing, they are more likely to run into very unfriendly mortgage standards.