Last month I wrote about the changes that began on October 3rd which would have a big impact on real estate and that these changes would give cash buyers a temporary advantage. Now I’ll clarify why this and other factors make the next 3 months one of the best times for cash buyers that we will see for a while.
The changes that took effect at the beginning of last month have had an effect. Sales in October will be close to what they were last October which is a change in the trend we have seen throughout 2015 which was an increase from the same month in 2014 of 9-25%. In addition to that, I have heard from nearly every agent, mortgage broker and title company I have spoken with that their new business almost completely died off starting the first week of October. Since there was a lot of momentum in September we wouldn’t see that in the sales for October, and November almost always has some decrease from October, but we will likely see this in December which is usually noticeably higher than November.
Most agents and many sellers are aware of the changes that started last month and the effects they are having on the market. Because of this, cash buyers are eagerly sought after and, from my own personal experience, get much more cooperation from sellers than we have seen during the last couple years in the seller’s market.
Some sellers can wait until the market picks up again in the Spring and will more stubborn on pricing and less willing to do repairs or give concessions. However, those sellers who have a strong motivating factor to sell quickly or who do not have the luxury of being able to wait until the Spring selling season are the ones most likely to work out a deal that is more favorable to a buyer. In situations like that, a cash deal which can close in 30 days or less will be jumped on and a financed deal that may take 45-60 days or longer will be met with hesitation.
Since the market starts to pick up again in late January or early February and then becomes very strong in March and April, the time when cash buyers will have the best opportunity to get a good deal is going to be November, December and early January – especially when willing to close within 30 days or less. In addition to this, since many sellers take their properties off the market from about mid-November to early January – the ones who continue to list their properties in November and December will typically be either the ones who are most motivated or investors who don’t have the same issues with the upcoming holidays.
So we now have the forming of a perfect storm for cash buyers for the next 2 to 2 1/2 months. 1) changes affecting financed deals are having an impact which makes cash buyers even more preferred than in the past and sellers willing to be more reasonable in many cases, 2) a slower period for the market with the strong buying season not beginning for a few months and 3) a period when many of the Active listings are strongly motivated sellers.
If you’re a cash buyer who has been thinking about making a purchase and can find a property you like, I would recommend acting by early January to take advantage of what may be the best period for buying we may see in the next few years.