Cash home buyers are important players in today’s residential real estate marketplace. Cash buyers made up 33.3% of all condo and single-family sales. In some segments of the real estate marketplace, cash buyers comprised almost 90% of purchases! But like any investment strategy, there are many tips and pointers that prospective home buyers should keep in mind when looking for their first home. Here are a few.
First and foremost, cash home buyers should be sure to investigate all of their options, including both types of financing. Many cash offers are offered through various sources such as closing costs, GAP Insurance, and PMI premiums. Buyers need to get an estimate of the closing costs and insurance they will pay before signing any type of agreement. Be sure to find out if closing costs will be waived, what premiums are associated, and what is the total cost of these fees. A smart buyer will shop all of these options carefully before making any big commitment.
Next, cash home buyers should look at the current market trend and determine if they’re a good investment. Real estate markets fluctuate and there are always good times and bad times. This is particularly true during recessionary periods where homes are often priced lower than their fair market value. Investors need to examine the current trends in the real estate market to see how buyers can capitalize on these times when values are low. Many investors like we buy houses Philadelphia buy during a slow time and sell for higher profit amounts than the home’s fair market value.
Next, buyers should learn how to prepay mortgage insurance so they don’t have to worry about paying this money during the process of selling the house. Prepaying mortgage insurance means paying a portion of the closing costs upfront before the buyer takes possession of the property.
Investors should keep in mind that this is an excellent way to protect their finances, but they should only use this strategy when it makes sense. A savvy investor will use pre-payment options when they see opportunities, such as government incentives, that will allow them to prepay their mortgages without straining their finances.
Finally, cash home buyers should research local tax codes and any special rules associated with selling a house in a particular area. Investors need to understand the local regulations concerning selling real estates, such as hours of operation, minimum price, and other specifications that can have an impact on the overall profitability of the deal.
For example, if the property has to be sold within a specific period or it has restrictions on who can advertise the property, the buyer may be better off selling at a different time in the real estate market. It may also make sense to contact the local county planning department for any information that can help with the sale of the house, like restrictions on building setbacks or the size of the lot area. While some buyers think they can take advantage of local planning departments to make sure the transaction goes according to local rules, the fact is that many such rules are outlined in legal agreements that must be strictly followed.
