All-cash buyers are still snapping up homes and getting lower home purchase costs

It costs more to buy a home in the United States now than ever before. Faced with high mortgage rates, rising home prices and low inventory, nearly a third of homebuyers choose to buy homes in full cash. Buying a home with cash will greatly reduce the cost of buying a home.

According to Redfin data, as of August this year, the proportion of homebuyers who paid in full cash has reached 33%, which is one of the highest proportions since the Great Recession.

Advantages of buying a home with cash

1. Eliminate loan procedures and interest

One of the biggest advantages of buying a home with cash is that it eliminates all the cumbersome procedures of applying for a loan. The traditional loan process usually involves multiple links such as credit assessment, loan approval, material preparation, bank review, etc., and the process is long and complicated, often taking weeks or even months to complete. Buying a home with cash does not need to go through these cumbersome procedures, and the transaction can be completed quickly, saving a lot of time and energy.

In addition, loan purchases usually require interest and other related fees, while cash purchases completely avoid these additional costs. Loan interest may account for a large proportion of the total price of the house, and long-term repayments will greatly increase the total cost of buying a home. Cash purchases allow buyers to pay for the house directly, which helps buyers save on this part of the expenditure and reduce the overall cost of buying a house.

2. More room for negotiation

Cash purchases usually provide buyers with more room for negotiation. In real estate transactions, sellers are usually more inclined to reach an agreement with buyers who can complete the transaction quickly. Cash buyers do not need to worry about factors such as loan approval that may delay the transaction process, so sellers are often willing to provide discounts or concessions to facilitate the transaction. This advantage is particularly evident in a competitive market, where cash buyers can stand out and get more attractive prices.

3. Faster transactions

The transaction speed of cash purchases is much faster than that of loans. When buying a house with a loan, buyers need to wait for the bank's approval process, and the delivery may be delayed due to factors such as the loan amount and interest rate. Cash purchases do not have a loan approval process, and can quickly reach an agreement with the seller and complete the payment. Especially in the real estate market, if the real estate supply is in short supply and the market competition is fierce, cash buyers who can complete the transaction quickly are usually more likely to be favored by the seller, ensuring that they can successfully purchase the desired property.

4. Strong property liquidity

Cash buyers also have certain advantages when selling a property. Since they are not bound by loans, they are usually able to complete the sale of the property quickly and avoid the trouble of loan repayment. This provides sellers with stronger liquidity, especially in a sluggish market or when the property needs to be liquidated urgently.

This year, the Federal Reserve cut interest rates after inflation slowed and the job market became balanced. But the mortgage market has not felt much relief yet. Some economists say that even if the Fed continues to cut rates, cash offers will continue to exist because cash is a way to win in a competitive market.

You can choose a house that is "cash buyers only" and negotiate the price to reduce the cost of buying a house!