Florida Leads in All Cash Short Sales
The Florida housing market has experienced a dramatic increase in all cash offers, especially for distressed properties.
Homeowners worried about facing foreclosure and bankruptcy know that short sales may be the answer to their financial hardships.
Recently, there has been some concern with all cash offers and how would-be homeowners will compete with these offers now and in the future.
People acquiring conventional loans find themselves in competition with homebuyers who have cash available to purchase homes.
Who Are Cash Buyers?
When the housing crisis began to unfold, international investors started purchasing distressed properties as investments. With housing prices so low, the potential return was better than what many investors could get elsewhere. Investors turned homes into rentals where the return on investment was immediate. It gave investors time to allow the market to recover while still generating income.
According to Lawrence Yun, Chief Economist for the National Association of Realtors, Florida had the highest number of all cash home sales of all 50 states. But it is not just from international investors.
Florida became an ideal place for vacation homes, or a perfect retirement location. Baby boomers living in the north started moving south – even if just for part of the year. Most of these homeowners purchased their homes early on and built equity that gave them the power to pull equity out of their homes and make cash offers for property in warmer southern climates.
Yun also surmised that baby boomers were buying pricier homes while foreign and domestic investors purchased at the lower end of the pricing scale.
Are All Cash Short Sales Faster?
Cash offers do not speed up a short sale. Alma Korshak says the closing might be faster but the approval of the short sale itself is not affected.
“Basically what you’re trying to ask is if a buyer decides to purchase the property cash versus financing is the short sale process going be quicker. And the answer is no. The only good thing about when a buyer is actually purchasing the property cash is when it comes time to close.”
“Once it’s approved then the closing could happen sooner when it’s cash versus with financing the lenders usually give you well anyhow even if you get it you can get an approval letter from a lender there to give you approximately 30, 40 days to close.”
“So if it’s cash of course we can close right away but if there’s financing we have to wait for that buyer to get their financing so that’s basically another 30 to 40 days to close and then sometimes you may run into situations where you find out that that buyer can no longer afford the property or didn’t qualify for this or a FHA and now they have to go conventional.”
The Future of Short Sales
Without a crystal ball, there is no way of knowing how this practice will affect the housing market in the long run. Many current reports indicate that potential homeowners are having difficulty competing with all-cash buyers. This is especially true of first time homebuyers and buyers recovering from a short sale or foreclosure. In most cases, they must rely on conventional loans, which makes it difficult to compete with all cash offers.
Short Sale Facilitators focuses on helping you negotiate the short sale of your home. We will negotiate with your lender regardless if the offer is cash or a more conventional loan.
After the short sale, you can focus on rebuilding your credit. As the economy improves, the housing market will react. That’s when the long-term impacts will surface.
The housing market is ever changing, however if you are experiencing a financial hardship you need relief now. Alma Korshak has been processing short sales (and only short sales) for over seven years and she has helped many people get out from under the stress of their mortgage. She can help you, too.