Cash is King

We've heard the adage "Cash Is King" when talking about real estate.  However,  it has historically been associated with getting a "deal" or significantly lower purchase price.  In our local Portland real esate market, that "deals ship" sailed about two years ago.  That said, now many buyers looking to purchase in close-in Portland and attractive surrounding neighborhoods and cities are facing multiple offer situations, with many of those offers being all cash.

Most first-time and move-up buyers need to acquire a mortgage to help finance the purchase of their new home.  It's the norm to have a conventional loan of 5%-20% down.  Two years ago, this truly wasn't an issue for buyer's looking to purchase, as seller's would accept these offers without thinking twice.  Now, these buyers face multiple offers, sometimes 10%-20% over list, with all cash often winning out.

Why is cash better for sellers?  It's one less hoop that can cause a problem for the transaction.  With a financed purchase, the loan has to go through underwriting that can sometimes throw up a flag.  Even more of an issue, however, is no appraisal is required with a cash purchase.  With homes going so much over list price, an appraisal could definitely cause a problem.  

Here's a fabulous in depth article that explains what is driving our Portland market, and how this cash is making its way to our area,  Cash is King .  Believe me, we who work in this market are hoping to return to some normalcy, but it doesn't appear it will be anytime soon.