A World of Cash Buyers

If you have been on the Buyer side of the real estate table in the last two years, then I have no doubt that you have heard the dreaded words “cash buyer” and they have struck fear into your heart. Who are these mythical creatures who have access to $400,000 in cash to purchase a home? How can any of us mere mortals hope to compete with the power of cash?

From a Seller’s point of view, cash will always be King. Cash means no appraisals, no worries about a mortgage being refused because the Buyer’s finances change, and an easy, quick Closing. Many Sellers will happily take 5% off the purchase price in exchange for the guarantees that cash offers.

Competing against cash buyers can be daunting and heartbreaking. The interesting news is that Mortgage Lenders are beginning to feel that heartbreak, in terms of lost business. Cash buyers don’t need mortgages! Lenders who are feeling this hit their bottom line are responding with interesting programs. I am seeing this now in South Jersey.

How does it work? If you are a well qualified Buyer, the mortgage company will purchase the home for you, with cash. They will then sell that home back to you, with a mortgage. This means, as far as the Seller is concerned, you are a coveted CASH BUYER.

What’s the catch? Yes, it’s the first question I asked too. Apparently, there isn’t one. The “catch” is the lender makes money from your mortgage, in the same way they always have. The “no catch” part may not apply to all of the Lenders offering this deal, so it’s all about checking the fine print.

I’m including a recent episode of the NPR podcast The Indicator here for you to check out. The podcast includes a lot of interesting information about these programs, and speaks with a family who used this type of mortgage to purchase a home.

If you are interested in knowing more, I am in touch with local Lenders who are offering “cash buyer” mortage programs - call me and I’ll introduce you!