How Effective is a Home Cash Buyer in a Hot Single-family Real Estate Market?

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Introduction

Zillow reports that the average US single-family home rose from $187K to $357K over the previous ten years – a compound appreciation rate of 6.7%. However, the home cash buying environment has shifted gears significantly over the last few months. Consider the following:

For 2021 versus 2020, the rate more than tripled to just under 20%, with a 13% plus forecast for the year projected to 2022. Of course, this isn’t applicable in every state, so let’s look specifically at Birmingham Al to derive a parallel comparison for SF-homes in that region:

Average price ten years ago was $60.8K
Today (October 2021), the price is $117K – a 6.7%-decade appreciation rate (i.e., same as the US yardstick described above).
In the last year, prices rose by around 22%, from the 2020 level of $96K.
Conclusion – Birmingham Al is more than keeping pace with the national average metrics.

What we’re witnessing since the pandemic began receding is a mass migration of people from congested city areas like NYC to suburban open spaces. Simultaneously, people coming out of the COVID-19 debacle have realized their home value in lifestyle terms and are, therefore, somewhat reluctant to sell. So, the short of it all is high demand chasing a severe stock shortage.

Where does this leave homeowners wanting to climb in on the pricing uptick?

The first thing to appreciate is that cash is still king when it comes to the best transaction. Why? For all the following reasons:

Selling for 100% cash is quick – around a week from offer to seeing the money in the bank.
There is no mortgage appraisal in the mix to derail the deal.
Although the markets are hot, the majority of buyers still depend on loan funding. This slows the process down dramatically to over a month.
There are generally no “get ready to show” costs, like remodeling, creating curb appeal, decluttering, and staging.
In many cases, you can get to a reputable home cash buyer without the help of a traditional realtor. This saves you around 6% of the home value in commissions before you begin negotiating.

So, even if the chase to buy your house results in an auction, the cash alternative has a distinctive edge.

Listen, my house is in great shape. Aren’t the home cash buyers only looking for bargains?

Yes and no. The home cash buyer has indeed been a valuable resource for sellers motivated by urgency and extraordinary circumstances. People in this category are families:

In divorce proceedings.
Selling off an inheritance.
Saddled with delinquent tenants.
Falling behind on loan obligations.
Dealing with liens.
Burdened with unaffordable disrepair.
Moving out of state.

The above generally accept a discount to get the deal done quickly and move on. However, even in vibrant market conditions, some of the above influences come into play. Working with a reputable home cash buyer can pay huge dividends if the sellers effectively bypass the realtor’s commission.

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Many home cash buyers are buying your residence for a long-term hold.

Last month we wrote an article about how Home Buyers Birmingham has good appraisal experience. Yes, it means the company understands that real estate valuations play into negotiations in a big way. We showed that Birmingham’s principal goes through the appraisal process personally so that when you’re sitting at the table, there’s complete transparency. As a result, you’ll find when dealing with Home Buyers Birmingham that they:

Will pleasantly surprise you with their starting price
Zone in the realtor’s commission savings to create some balance.
Won’t short-change you, even though they have to hold the property long-term to get the appreciation benefit.
Bring all the home cash buyer advantages to the table without compromise.

To quote from the previous article, “There has to be a middle road – a balance, if you will – where the appraisal fits into the formula for a win-win. In short, it should converge on solving the seller’s most pressing issues but not take unfair advantage.” The latter says it all because home cash buyers who ignore radically changed market conditions have their heads in the sand with an ostrich mentality. Fortunately, it’s never the case with Birmingham Home Buyers.

And if my homeowner situation is genuinely one of distress?

Birmingham is versed in all kinds of situations, including dealing with “iffy” tenants, aggressive lenders, lien holders, and significant disrepair in the home. It makes no difference; your fair appraised value will still figure into the calculations before accounting for the issues in a way that makes sense. The two massive benefits on your side are:

A home cash buyer with the highest integrity to deliver a bottom-line deal that’s fair.
Fast cash into your bank account within a week or so.

Problematic residences frequently find they can’t get realtors’ undivided attention, versus clean houses taking front and center stage in a bubbling sellers’ market. Being pushed to the back-burner is unnecessary with companies like Home Buyers Birmingham around.

Conclusion

There is always a role for home cash buyers in both hot, neutral, or cold markets if you connect to those who understand real estate from corner to corner. The Home Buyers Birmingham team is very busy with clients creating compelling deals that make sense from every angle. So, give them a ring and see for yourself – capitalize on the trends in the region.