Reply to Anyone else who will likely never be a home owner?

Forum Index » Real Estate

Reply to "Anyone else who will likely never be a home owner?"

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[quote=Anonymous][quote=Anonymous]
I think there's some confusion here. What we're saying is that many of the buyers winning the bidding wars with cash offers didn't have the cash themselves. They worked with the lenders (recommended by their realtors) who set them up with loan products to borrow the money at an exorbitantly high interest rate. They used this borrowed money to make a cash offer. Then once they purchased the home, they refinanced to pay back the short-term loan. It cost the buyer a lot to get this short-term loan, but it was the only way to win the bidding wars that required a cash offer.

These days, buyers don't need to enter bidding wars with cash offers to get the house. So they're not using these very expensive loan products that enable them to make an offer that looks like a cash offer to the seller. The amount of buyers who "paid cash" is much lower than it seemed because they didn't really have the cash themselves so they refinanced as soon as they closed.

I hope this helps explain a little more.[/quote]

It's actually less complicated than this. Most of the "all cash" buyers are simply people who waived the financing contingency with the expectation that their conventional/jumbo loan would be ready in advance of the closing. It's a bit of a risk because if the loan is delayed, then the sellers could technically sue them for specific performance (i.e., requiring them to pay the entire cost of the house in cash). But the reality is that most sellers won't actually pursue that because they don't want the house to be in limbo as the litigation plays out.

In other words, most "all cash" buyers aren't "all cash" at all. [/quote]

Options

	Disable HTML in this message
	Disable BB Code in this message
	Disable smilies in this message

Review message

Search Recent Topics Hottest Topics