What Part of Buyers of Homes Pay Cash?

The answer isn’t simple, but it depends on the situation. In a housing market that’s becoming increasingly competitive, some homebuyers are choosing to pay with cash rather than taking out a mortgage to finance their purchase. These types of transactions are known as “mortgage-free” purchases, and they’re often made by high-net-worth buyers or investors.

First-time buyers typically have a difficult time putting together enough cash to make a down payment on a home, especially in areas where mortgage rates are high. These people aren’t necessarily able to obtain a loan from their employer, or they might not have a family member with whom to borrow the money.

Retirees and trade-up buyers who already own homes are also likely to choose to pay cash for a home, according to real estate data from Redfin. They may have accumulated equity from their previous homes, or they might have access to funds through a retirement account or other sources. Also read https://www.atticushomebuyers.com/we-buy-houses-appleton/

All-cash purchases are common in many metro areas, including Florida, where a recent study found that more than half of the home sales were done with greenbacks in October. Jacksonville, Florida topped the list of cities with the highest percentage of cash-purchased properties in October. The next highest-ranked places were West Palm Beach, Florida (48.6%), and Cleveland and Cincinnati, Ohio, (48.4%).

The most common types of cash buyers include second-time homeowners who have the equity to invest in a new home, and wealthy foreign and domestic buyers who aren’t concerned about rising mortgage rates. They might have accumulated their cash from stock options, inheritances or other sources, says Michael Durkin, chief economist at Zillow.

Remote work arbitrage: As more workers moved out of expensive, high-cost metro areas for cheaper locations, they paid cash to buy homes in less-affluent parts of the country. This trend has slowed, but it’s still happening.

In a competitive housing market, cash buyers tend to be more successful in winning bidding wars than those who have mortgages. That’s because a seller can’t be held liable if a mortgage lender doesn’t approve financing, which might result in the sale falling through.

It’s important to note, however, that cash buyers may not always win a bid. This is because sellers are looking for the best price and terms.


The seller’s agent should be able to tell you whether cash offers can win bids. They’ll be able to look at the listing and see if the property has a lot of competition, which will make it easier to determine whether a cash offer will be the winner.

A seller might be willing to accept a lower purchase price in exchange for a cash discount, and that could be enough to close the deal. A cash discount is more likely when the price of a home is high, and the seller is worried that a buyer might back out if they can’t secure financing.

In a hot housing market like New York City, where homes are often sold above asking prices, all-cash offers are more likely to be accepted. These deals are often more attractive to sellers because they have the flexibility to close quickly without waiting for approval on a loan, says Tricia Lee, associate real estate broker at Leave the Key in Brooklyn.