According to existing and new home closing data from Metrostudy, 28.22% of the recorded 4,775,522 closings during 2015 were purchased by cash buyers.
As a share of total state closings, cash purchases were most prevalent in Florida – 47.8%, followed by New York State and New Jersey at 45.8%, Alabama at 44.2% and Michigan at 38.4%.
The data begs the question “Why does Florida have so many cash sales?” The answer is a combination of factors that include the following:
- Florida has the largest percentage of international buyers and they usually pay cash for their properties.
- Florida is popular with both small and large investors buying properties to rent; they usually pay cash as well.
- Sellers are likely to favor buyers who can pay in cash because all-cash purchases streamline the home-buying process. No loans = less paperwork and no delays for mortgage approval.
- Many buyers sold larger, more expensive homes up north and will pay cash for a new home here.
- If paying cash, the buyer is not required to purchase flood insurance.
- Cash buyers gain full, immediate equity in their home.
- Advantages to Buying a Home with Cash: www.realtor.com
- Treasury’s New Disclosure Regulations for All-Cash Buyers: www.forbes.com
- Real Estate Investing: How to Find Cash Buyers and Motivated Sellers, by William Johnson