I pulled this article from Realtor.org. It covers what is happening across the nation, and here in Hawaii too. I have had the great privilege of working with a good number of Canadian buyers who are recognizing the values right now with cash.
A good number of foreclosures cannot be purchased right now with a mortgage, so the cash buyer has a great deal of leverage, and even with homes that are not in distress, a cash buyer can get a great deal because of the lenders restrictive measures. A well qualified buyer is having a hard time getting a mortgage. If the seller’s agent is educated, he will recognize the value of a good cash offer and convince the seller to accept it.
Investors, foreign buyers are cashing in on market.
With affordability at an all-time high, the number of investors and international buyers taking advantage of bargains has reached a record number in all-cash purchasesâ€”and some experts predict that number will only grow higher.
A record 33 percent of existing home sales were made to cash buyers in February, the National Association of REALTORSÂ® recently reported. “The proportion of cash deals could hit 40 percent by the end of this year,” predicts Thomas Popik, research director for Campbell Communications in Washington, which conducts monthly surveys of 3,000 real estate brokers.
“Lenders have only been willing to lend to the cream of the crop in terms of credit scores,” says Walter Molony an NAR spokesman. “As a result, you’re seeing a depressed level of traditional buyers.”
But itâ€™s not just investors moving in; many of these cash deals are also coming from a growing number of international buyers. About 55 percent of international buyers paid cash for their U.S. homes, according to an April 2010 report by NAR.
What is the cash buyer advantage?
“Cities where about half of all purchases were done with cash include Detroit, Miami, Las Vegas, and Phoenix in which prices have dropped considerably and foreclosure rates remain high,” says Oliver Chang, a housing market analyst with Morgan Stanley. Short sales and foreclosures accounted for 59 percent of last year’s cash sales, according to a report by Morgan Stanley.
“You buy the house at a discount with cash, then you flip it almost immediately to the first-time home buyer who’s using a mortgage, simply because they were not able to buy at the foreclosure sale,” Chang says.
“Lenders increasingly reject mortgage applications for foreclosed properties because appraisals are often too far below the agreed upon price, or the transactions take too long to close,” says Popik. With tightened lending standards, cash purchases can provide buyers with more leverage and allow buyers to close properties more quickly.
Mike Simmons Troy, a Detroit real estate investor, says that if a house is listed at $40,000 and a buyer offers $35,000 cash, “nine times out of 10, the bank will take the cash.” Of course, the numbers for Maui will be different than Detroit, but I think you get the idea here.
Let me know what I can do for you.