Are all-cash offers the 'real' deal? | Bay Area

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Real Estate

Hello friends, welcome back to the channel. I'm Nagaraj Annaiah, a Bay Area tech realtor. On this channel, we explore Bay Area real estate news and developments, as well as providing practical advice on how to buy your next home. Take a look at the top real estate headlines of the week before we get to the big story: Are all-cash offers good? Jump to your favorite chapter and view it now. Feel free to post any property-related queries in the comments section below. If you plan to buy or sell a home in the Bay Area, contact me RIGHT NOW. 


  • In an all-cash deal, Stockbridge Capital Group acquired the Alameda biotech headquarters for $158.9 million in the hot Harbor Bay area.
  • A large office park has been acquired for $82.8 million by Center Capital Partners in Redwood City, San Mateo County.
  • Marin County's Mill Valley Golf Course will receive a $1.7M upgrade in the next five years. Mill Valley Golf Course was a profitable and popular business between 1960 and 1980, known historically as a local "piece of paradise." 
  • Walnut Creek's Palmer School is being demolished and replaced by 125 three-story townhomes. Coronavirus pandemic forced the closure of this private school founded in 1939.
  • Rents in the Bay Area have gone up 10 to 16% in the last few months, almost back to pre-pandemic levels. The biggest jump was in San Mateo, at 16.5%, followed by San Francisco at 15.6%.
  • Sonoma County's Bodega Vineyard is adapting to climate change by growing grapes closer to the ocean.
  • California is considering a bill that would impose a 25% gain tax on house flippers who sell within 3 years. Assembly Bill 1771, or the California Housing Speculation Act, aims to change tax policy for real estate and discourage investors from quickly reselling properties like single family houses.

How all-cash offers can help you buy a home

There is a lot of excitement over cash-only offers in the Bay Area right now. There is no longer any surprise if 90% of the offers a house owner receives are hard currency. To be honest, such deals are more attractive to sellers because they offer more security. A faster closing period is also a perk of all-cash offers. Plus, you won't be negatively affected by your credit score. Also, buyers with all-cash offers may have more influence over a seller. When buyers have cash on hand, they may be more willing to negotiate, so you might be able to get a house for less than the asking price. An all-cash offer does not need to be appraised since there is no lender involved. You can offer 5% less than the market value. You can also be cheeky and offer 10-20% under asking price, but expect to lose out because there are already many others waiting to buy the property at this price. 

And now, something else is happening to heat up the US market even further. There are startups like Ribbon offering to buy homes for you with all-cash offers for a 1-3% transaction fee. Some home buyers are going for it after having lost the opportunity to buy homes previously. Other shoppers are skeptical about this development.  

The rise in all-cash home purchases coincides with a continuing seller's market that sky-rocketed during the pandemic. Bringing all the cash to the table could eliminate or end a bidding war. And quite frankly, for some buyers, skipping a traditional mortgage in favor of liquidations from "power buyers" such as Ribbon, Orchard, UpEquity, Fly Homes and has proven essential at a time when there is a shortage of homes for sale.

How can I buy a house if I don't have enough money?

According to the National Association of Realtors, all-cash purchases make up 33% of home sales today, compared to 19% two years ago. Speed is crucial for buyers. It can take 24 to 48 hours for a home to be taken off the market. A power buyer, such as Ribbon, helps buyers from all economic backgrounds compete with investors who throw large sums of cash at sellers who want a quick sale.

What's fueling the demand?

Restrictive lending standards are also contributing to the spike in all-cash purchases as many buyers, especially wealthy ones, choose not to take out a loan. Furthermore, aging baby boomers who are selling their homes can use the equity they've built over decades to buy a new home. An increasing number of foreign buyers are buying homes outright without a credit history in the U.S.

Who is losing out on all of this?

Those resources, however, are not readily available to many qualified and prospective home buyers. It's all about cash nowadays. In addition to not having access to cash, many of those buyers are also being outbid by buyers who sometimes offer between $20,000. and $30,000 over the asking price. Competing power buyer companies usually take half of the typical 5% to 6% commission based on the sale price of a property. Ribbon, on the other hand,  charges a transaction fee of 1-3%, depending on the service and the state.

What's the way out?

Yes, the current housing market is unsound and all-cash purchases are partly to blame. However, if you're a seller and you have two similar offers, one of which is cash, why wouldn't you take it? Similarly, if the buyer has secured a loan and all of their paperwork is in order, then the buyer shouldn't have to pay a third-party entity to get the house. The mortgage approval should be as good as the cash.

How can realtors help here?

When selecting third parties, such as Ribbon, you should carefully consider your options. Since every market is different, it is important to trust the expertise of a local realtor like me. Give your real estate agent a chance to be your advocate by setting up your financing, whether you are using an all-cash option or not. After all, there is no catch. No hidden fees. If you don't want to finish second, make cash-only offers. Having the best interest of my clients is also my priority. Every option should be explored.



Mortgage rates in the United States were affected by the conflict in Ukraine. It was down one moment and up the next. Yet, the volatility is clearly evident. Nobody could predict the direction of the rates. In the past week, things were really quite crazy, going from 3.96% to 4.28%. It has been a volatile time, with the rate not only changing a lot from day to day, but in many recent instances changing multiple times per day. For the first time since early 2019, the average lender has risen above 4.25% for the first time.  As a result, last week's rates were the highest in almost three years.


What is the lender sentiment now?

It is expected that mortgage rates will continue to rise over the next quarter, and refinancing activity will decline accordingly. 75 percent of the lenders responding to Fannie Mae's Q1 Mortgage Lender Sentiment Survey expect lower profit margins for the next three months. The top reasons that lenders cited for predicting a decline in profits were competition, changes in market trends, and consumer demand. Additionally, they were more pessimistic about the economy as a whole. 


Here are some other mortgage news...

Fannie Mae and Freddie Mac have pledged over $1 billion to support affordable housing. What a wonderful gesture! Federal Reserve Chairman Jerome Powell insists on a 25-basis-point rate hike. In January, construction spending rose 1.3% month-over-month, which is 13.2% higher than it was in January 2021. Employment conditions were generally better than expected in February. The average hourly wage remained unchanged; the average workweek climbed to 34.7 hours, and the unemployment rate dropped to 3.8%, while employment rose to 62.3%. In January, the number of government jobs grew by 24,000, a slower rate than the number in February. Manufacturing payrolls increased by 36,000 in January, more than doubling their pace from the previous month. There was a much larger increase in non-farm payrolls than expected, reaching levels of 678,000 and 654,000, respectively.


Well, that's quite an update on the mortgage side of real estate. We can expect rates to remain volatile this week as well. How crazy is that?



According to CoreLogic sales data, the median price of a single-family home in California rose 14.6% year-over-year in January, to $1 million, with the biggest increases in Santa Clara, San Mateo, and Alameda counties. The typical home sale price in San Mateo County was $1.7 million, more than $200,000 above the San Francisco metro and the San Jose metro. For the first time since 2018, the Fed plans to increase its key policy rate next week, but mortgage rates are already the highest they've been in nearly three years. Thanks to the Russia/Ukraine war and the resultant rise in gas prices, inflation has only gone up. Looking at the rising competition, all-cash offers are your only option. Let me guide you through it all. If done well, this can be a winning strategy.