2021 Housing Market: Cash is King, Don’t Rush to Waive Appraisals, Inspections and Mortgage Contingency

Last Updated on June 1, 2021

MyFinancialTimes is a reader-centric site. We may receive compensation from the products and services we mention or recommend in this story, but the opinions are the author's own. Remuneration may impact where offers appear. We may not include all available products or offerings. To learn more you can visit our advertising policy and editorial policy.

In the 2021 housing market cash is still king. Here’s why …

As many prospective buyers know all too well there’s been incredibly low inventory in recent months, which makes it a seller’s market. Should you waive inspection? Waive appraisal? Make an all-cash-offer? Some realtors would tell you to consider all three. But a recent survey found that cash still trumps everything.

A survey conducted by Zillow Premier Agent partners researched the best ways to win a bidding war in 2021. The survey’s final conclusion was that cash is king. To stand out in a sea of buyers, offering a full cash offer will definitely catch the eye. Years ago, many prospective buyers would bid lower than the asking price, but that tactic will get you nowhere in today’s housing market. Many homes are going for $50,000 – $100,000 over asking.

The survey revealed that when agents put in offers for their clients (averaging about 6 offers per client), the most successful ones were in cash. According to Zillow, “About four in five agents (77 percent) sometimes submitted all-cash offers on behalf of their clients, and 41 percent of listing agents said an all-cash offer was the most effective strategy in their recent transactions.”

Another strategy that has seen success is offering a larger down payment. About 21 percent of agents won houses for their clients when offering a higher down payment or more earnest money. Submitting before the review date was also helpful when competing in the bidding war. Some agents were more creative than others, suggesting that buyers send flowers or dinner to the sellers to “sweeten their offer.”

Handwritten letters that express your love for the home may seem like a good idea, but more often than not sellers are more interested in your bank statements. Zillow also says it’s risky. When buyers attempt to make a personal connection with house sellers, they often run the risk of violating the Fair Housing Act, which can remove them from the pool of potential buyers faster than a low offer would. Zillow also discourages waiving inspection because it can hurt buyers in the long run. Waiving those steps may look enticing to a seller, but it’s important to make sure there are no structural problems. Issues with the roof, AC, heat and general structure can be quite serious if they’re not addressed.

While it’s not certain if the 2021 housing market will get better or worse, experts are sure of one thing: cash is king. Many offers that have fallen through in the last year have toppled because an appraisal was way too low and prospective buyers couldn’t get the mortgage commitment they were hoping for. If an appraisal comes in low it can affect a mortgage commitment. As a result, a savvy seller wants to avoid a big mortgage whenever possible. Lenders can create issues and delays. If there’s no mortgage and lender the two sides can potentially close on the house more quickly.

As inventory plummets and prices go up across America, real estate agents are beginning to experience new obstacles when securing homes for their clients. Agents have gotten creative with their strategies to win over sellers, but full cash offers have proven to be the best way to win a bidding war.

Many prospective buyers have felt a sense of panic in the last 12 months. Inventory plummeted across the United States, leaving very few options. The New York Times reported that in early 2021 there were only 468,000 homes for sale!

Just as it affected nearly everything else, the pandemic has caused many people to reconsider selling their homes. Elderly people who would have moved into a nursing home or retirement community five years ago are now afraid to leave their home due to Covid-19. Gen X and Millenials are avoiding the housing market as well. Before Covid-19, open houses were the norm. Even after many vaccinations, some prospective buyers and sellers are still worried about being in a house with a number of strangers.

So what happens if you don’t have a lot of cash to put down? Is all lost? Nope.

Check listings every day. Be the first one to see a house, and make an offer quickly. Sometimes, the early bird gets the worm!