Home Seller Brings Cash To Closings

Is it a buyer's market? Yes it is! Get used to it!  The times have changed in most real estate markets.  The recent frenzy in real estate where seller's called all the shots are now but a fading memory.   We are in a changing real estate market that is marked by softening home prices, excess of inventory, tightened lending standards, a dwindling pool of buyers, declining home values, negative equity positions, and finance terms that are correcting.   What does all that mean?  It means the sellers may be upside down and owe more on the home than the home is worth.  It is a bitter pill for many sellers that can still quote last years neighborhood home values.  Too bad those numbers cannot be attained this year.  The tighter loan requirements, dual appraisals are blocking the way to higher sales and appreciating home values.  To sell their homes in this current real estate market, it is not unheard of for homes to sell below what they were purchased for just a short time ago.  For sellers that are selling today and participated in 100% financing... that means there was no pad to absorb the drop in value.  To sell the home in today's market means they will have to absorb the dollar loss in value, pay the commission to both real estate agents, and pay the concessions of closing costs for the purchaser.  The dollars can quickly ad up and compound an already stressful position, and the reality for the home sellers could mean they will have to take money out of savings to make up the difference.  Sometimes it is a few hundred dollars, and sometimes it is 20 or 40K!  That can hurt. 

If a person has the cash to pay the loss and not damage their credit, that may be the wisest course of action.  For me it is always about getting from Point "A" to point "B!"  If a loss is made on one home, chances are they can be recouped on the next purchase.  The quicker the seller acts the better.  If real estate markets continue to devalue, the losses will start to snowball, and the losses and expenses to the seller will be greater.  If the sellers fall to act, this will further exacerbate the situation.  Those that have a limited or no equity position will fall into foreclosure, and others will have to bring bigger amounts of cash to closings to walk away from the deal financially intact.