Quote:
Originally Posted by Biggd
I know this is a Lake Winnipesaukee forum but I don't believe I said everyone is buying vacation homes around Lake Winni with cash from their primary home.
A vacation home can be anywhere people go to vacation. The economy doesn't revolve around just NH.
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One other thing folks keep forgetting.
A "Cash" offer does NOT mean the buyer has the cash sitting in their checking account.
All it means they are willing to write the contract with no contingency for a bank loan approval. With high demand it was often a necessity if you wanted a property to make a "cash" offer. I've done "cash" offers with every intention of getting a loan and I was confident I'd qualify for the loan and had more than enough down payment that would cover a low appraisel.
In the past you could save money making a "cash" offer because that was a more secure offer to the seller than a higher financed offer.
Although some sellers now demand that you have "proof of funds". But that does not mean you have to use those funds you used as proof. You could show them your retirement account and then go get a loan.
So nobody knows how all these homes were actually financed. Only what was written on the contract, which is totally irrelevant.
But I will say, there are a lot of people with a lot of cash.
I've "financed" every way imaginable
Including have a bank loan approval on the contract when I intended to pay cash.
The only thing really required is you show up with a check on closing day. Where the money comes from and what was on the contract could be any thing.
My guess is 1/3 of the "cash" purchases were true cash purchases. They could have sold another property (possible with a bridge loan), refinance another property or did a standard mortgage. My guess is they surely had hefty down payments on hand though.
Also with the Septic Assessment requirement for water front, you can walk away from any contract if you just don't like the assessment. Most buyers don't know that though. So there is little risk in making a cash offer initially. And the assessment is technically not due until closing !!
For our last purchase I had money from a sale (that had no mortgage), but not enough to cover the new home. But I made cash offers well over what I had in cash. We had a good sized equity loan on our primary with no balance (great advice someone once gave me). So I just used that. But the seller demanded showing we had the cash so I showed them our IRA, which I never used. It's all fun and games.