Traditional mortgages aren’t enough, you need cash to buy a home



CAsh is king when it comes to buying a home. According to research RedFinCash offers increase homebuyers’ chances of getting a home by up to 290 percent. There is serious firepower behind all-cash offers, especially in a hyper-competitive market with limited supply. When the average Utah home sells in six days and receives multiple bids, it only makes sense that someone would use the cash to gain an edge.

The problem is that not only someone has this kind of cash on hand or in the bank, but also buyers who are missing out on their dream home in the current market. Add to this the concerns of institutional investors such as Black Mountain use your money to buy more inventory, making it harder for the average American to buy and forcing more people to rent out, which is the perfect storm against new buyers.

But that is not all. While it is true that investors are contributing to low inventory levels in Utah and elsewhere (they earn roughly 20 percent of property purchases nationwide), only about half of investors use cash to pay for their investment property, and this figure hasn’t changed much in recent months. If anything, a smaller proportion of investors are buying with cash now than a few years ago.

The increase in cash-only supply is largely driven by wealthier, older people who have the right to refuse a traditional mortgage. Nobody points the finger at these people for “destroying” the market; they are just people using what they have to get what they want. But how can the average person compete when investors, institutions and arrivals make the market more difficult? Will only Californians with cash win when they move to less expensive real estate markets?

Not anymore. At Homie, we have been hard at work on a program for Utah homebuyers who otherwise would not have been able to afford the cash supply. Homie cash this is a new service offered by Home loans allowing homebuyers to upgrade their offer to cash. Here’s how it works: Homie Loans provides a cash loan to a qualified buyer. The buyer uses the cash to buy the house. Shortly after closing, the buyer refinances the long-term mortgage loan. The seller closes quickly without any financial cost, and the buyer gets the house and the mortgage. Everybody wins.

This all looks good on paper, but will it work? We’ve already seen that cash matters to the first few Homie Cash buyers. One buyer viewed over 20 homes and made three traditional bids that significantly exceeded the asking price. They tried the traditional route for a month and got nowhere. Their first offer in cash was accepted. In their case, cash helped close the deal, and I expect that cash will be what makes the purchase of a home for many buyers in today’s market decisive or not. In fact, I strongly believe that other Utah companies will soon begin offering similar services.

With all this in mind, it should come as no surprise that cash will play a large role in real estate transactions in the future. Under the current circumstances, this may be the only way to get a home in increasingly competitive housing markets like Utah. Without access to cash, most people will lose their ownership of their homes. So we’re putting cash into the hands of qualified home buyers. And hopefully that money will be the key to unlocking home ownership for years to come.


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