
Even in the high-end home market, cash is still king
Paying cash for a seven-figure home happens more often than people think, says Joan Herlong of Herlong Sotheby’s International Realty.
“Some buyers may finance part of the home as a tax shelter,” she says. “But in many cases, if they have the cash, they’re going to pay cash.”
And paying cash brings certain benefits for buyers and sellers, alike.
“Most notably, if the buyer brings cash, the seller knows the money is there,” she says. “There’s no waiting, no guessing, no wondering.”
Cash also greases the wheels in what can be a lengthy closing process.
“A cash buyer can close quickly,” she says. “Whereas those borrowing the money are constrained by lending rules that slow things down.”
Another benefit is that cash offers are not contingent upon appraisals.
Herlong says some cash buyers sometimes include an appraisal contingency, but that can be perceived by a seller as a red flag.
“This is because it removes the ‘arms-length’ aspect of the appraisal process, which could lead to a conflict of interest, depending on who the buyer brings in to do the appraisal (their brother-in-law, for example).”
The bottom line? Even in high-end residential home sales, cash is still king.
“If there are two identical offers on the same listing, the cash offer will almost always be the seller’s choice,” she says. “And it’s way more common for people in the market for a seven-figure home to come to the table with cash than first-time homebuyers.”
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