Tuesday, March 1, 2011
Rock-bottom prices on residential properties have led many recent buyers to pay in cash. With so much mistrust of lenders and the complications that come with mortgages, the number of all-cash property purchases in 2010 was up 14% from 2008. Industry experts credit the dragging property market with bringing sale prices to what may be their absolute lowest, leading many investors to take advantage of the prices by paying the entire purchase price in cash. They point to trends showing that the worse shape the economy is in the higher the rate of cash purchases – this trend is not just limited to real estate, but purchasing in general. One of the reasons is the difficulty borrowers seen as a good credit risks face when trying to secure a loan in a poor economic situation.
In addition, cash purchasers are frequently able to negotiate a substantially reduced purchase price due to the fact that they are paying in cash, allowing sellers to receive their money quicker and with less red tape.