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What Do Cash Buyers Know That Others Don’t?

Now is the time to buy!

Here’s a quick video I did on the cash sales in Big Bear along with two conclusions I came to.

Direct link to the YouTube video.

1.  People with cash are moving to real estate as a good investment.  They are thinking prices are near the bottom and now is the time to buy.

2.  Just because you are paying cash, do not expect a huge discount off of the sales price.  In Big Bear, you can expect an average of 2% savings for paying with cash as compared to paying with a loan.

As discussed in this LA Times article, many people think 2011 is going to be the time to buy.  Low prices, ample inventory, and rock bottom interest rates are a winning combination for today’s buyers. As was pointed out in the article, even if there is still some room to drop in prices, that will be wiped out by the increase in interest rate.

“You might think you can snag a great deal by lying in wait — hoping that the owner of a $500,000 listing will get desperate enough to accept $450,000, for example. But if interest rates rise 1% during the time you wait, you’ll end up shooting yourself in the foot.  Assuming you finance $400,000 of the purchase price of that home, the 1-percentage-point difference between a 5% mortgage and a 6% mortgage will cost you more than $90,000 over the life of a 30-year loan.”

So, no one knows for sure when we will see the bottom of the market.  But, many people are betting with their dollars that we are pretty close right now.

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