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The Competition has Cash

With the flood of new buyers, Portland’s low inventory situation (of 1.4 months) is a contributing factor to the rising home prices seen throughout the metropolitan area. The average Portland home price is now up to $397,700, almost a 13% increase from last year!  However, the online news magazine Investigate West, suggests that there’s another reason home prices are going up. According to their report, cash has become a major culprit in the buyer’s market.

Traditionally, buyers find a home they love and finance it with a mortgage. But, things happen…and issues related to the mortgage can cause a deal to fall through. In the seller’s eyes, this makes mortgages risky, and that is why they tend to love cash offers. Often times sellers will choose a cash buyer even if the traditional buyer offers more! New cash buyers have even started to waive inspections, something a traditional home-buyer may not realistically be able to do.

Who can afford to waive inspections and pay cash for homes in this pricey real estate market? Investors, says Investigate West. According to their report, private equity firms have been buying up properties and selling bonds to investors to flip or rent.

How can traditional home buyers compete? RealtyTrac found that almost 14% of these cash buyers are borrowing money from friends and family to pay for homes up front, to compete with these investors. They then pay the money back by financing the home after closing. It may be an unconventional method, but it’s this type of creative thinking that will keep the traditional home-buyer competitive…

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