Cash is King

We heard that last year, across the country, about a third of all sales were closed with cash, or at least did not have mortgage contingencies (that means that the buyers could have gotten a mortgage, either before or after the closing, but didn't require that they have one in order to close).  Given the low interest rates available out there now, that's particularly amazing, and says a lot about the difficulty of getting a mortgage now.  Even at the best of banks and mortgage companies, there are more regulations, requiring more paperwork, effort, and time, than ever before.  Many people who can, therefore, are choosing to opt out of the process.

When it comes to Connecticut, the results are even more surprising.  Last year, 39% of state sales were reported as cash deals.  We were about the same, or even a little higher, at Pearce.  Then we looked at this year's statistics, which were greatly affected by weather and delays, so that sales were down across the region for that period.  We were startled to discover that 56% of all our sales for the first four months were for cash, or without mortgage contingencies! And this in a period when not only are interest rates historically low, but when the stock market is performing very well, leading investors to want to keep their money in the market.  We know credit is tight, appraisals are an issue, and that exceptions are rare, but we still can't get over this fundamental change in the way business is done in our industry.  Will it continue?  Dodd-Frank would argue yes, but the number of buyers out there who can't afford to pay cash would argue no.  I guess we'll just have to wait and see.

Back to School, Back to Work

I've been out of school for a very long time now, and I don't even have kids in school anymore.  Still, to me Labor Day seems like the beginning of the year, every time it rolls around.  And I don't think I'm alone, because we can certainly notice it here in the office.  One agent just said to me that he'd been spinning his wheels all of August, waiting for people to get back to work and also to their real estate issues.  This year, even the weather made us want to get out of the swimming pool and back to our desks.

What does that mean for sellers and buyers?  There is a noticeable uptick in the market from Labor Day through Halloween, and it's a window you should use to your advantage.  If you trying to sell, this is when you need to get real about the price, the condition, and the cost of waiting versus selling now.  If you are buying, you may find more product out there to choose from, and you may find it easier to make a deal, particularly if you are buying for cash.  Whichever camp you're in, don't let the season pass you by.  Get out there and let the cooler weather spur you on to action!