Yes, even cash buyers
If you have the cash to buy a house outright, why wouldn’t you? In short, because you likely have better things to do with your money. Plus, if a buyer could get many of the benefits of buying in cash without tying up all of their cash in one home, wouldn’t they do it?
Why people buy homes in cash
People with the means to buy in cash do so for a number of reasons, for example:
- More compelling offer. When sellers are comparing a cash offer to a mortgage-backed offer, the cash offer often wins out, even if it isn’t the highest bid, simply because of the speed and certainty to close.
- Simple process. When you buy in cash, you have far fewer “hoops” to jump through (e.g., appraisal, underwriting) during the closing period.
- Lower costs. Cash buyers pay fewer transaction costs than mortgage-backed buyers do.
- Defer the mortgage – maybe indefinitely. Cash buyers can wait to take on a mortgage at a later time when (fingers crossed!) mortgage rates have come down.
Cash isn’t always king
Every option has tradeoffs, and that includes the option to buy a home in cash. Here's how Acre compares to a cash purchase. With Acre you still get the benefit of a compelling cash offer and simple closing process, and you can also decide to get a mortgage down the road or move on without the hassle of selling the home.
What to consider
- Opportunity cost. If you have better things to do with your money – e.g., investing in other assets – make sure you consider the tradeoffs with putting all of your money into one home. See, for example, Table 1 below.
- Length of stay. If you’re uncertain about how long you’ll be in this house or know that you’ll be in it for, say, less than 7 years, you’ll probably be better off with Acre than a cash purchase.
- Risk tolerance. Buying and living in a home is like operating a small business. That comes with the opportunity to make a return as home values increase, but it also means taking on the risk that they don’t – and also that your HVAC or roof fails along the way.
In summary, if home price appreciation is at or below the long term national average and you have other things you can do with your money, you are potentially better off with Acre.
In summary, if home price appreciation is at or below the long term national average and you have other things you can do with your money, you are potentially better off with Acre.
Don’t believe it? Sound too good to be true?
Many buyers and agents are surprised to hear that there is another option out there, and we don't blame you. Want to see the numbers for yourself? Text or call (984) 370-8720 with your questions, or set up a time to talk through your situation.
an Acre Home
