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Homebuyers flocking to cash for deed transactions during unprecedented housing market

Strategy allows property to be transferred from seller to buyer without involving lender
Florida homes
Posted at 6:00 AM, May 10, 2022
and last updated 2022-05-10 06:00:48-04

PALM BEACH COUNTY, Fla. — Many homebuyers in South Florida are choosing the cash for deed transaction route when buying a home.

Mortgage lenders say cash is king right now, making the market even more competitive for the average home buyer.  

"I feel like I'm forced into basically living in my car," April Wade, a Palm Beach County teacher, told WPTV. 

Wade said she doesn't know what her next step will be. 

"We moved here to be ... I wanted to raise my children close to family," she said. 

April Wade, struggling renter in Palm Springs
April Wade of Palm Springs is among the renters struggling with the rising housing costs in Palm Beach County.

Wade and her husband relocated to South Florida four years ago when housing was much more affordable. 

"We rent a two-bedroom, two-bathroom townhouse in Palm Springs, and we pay more than what one of my paychecks is," Wade said. "I get paid biweekly."

They pay $1,600 a month for just enough space for their family of four. 

However, the family's lease is up in August, and with rent up 57% from last year, the largest increase in the nation, Wade said she can see the writing on the wall. 

April Wade's townhome in Palm Springs
April Wade doesn't believe she can continue to afford to live in her townhome in Palm Springs.

"Looking at the current market, I'm thinking it's going to go up at least $400, if not more, which would put us up into the $2,000s range," Wade said. 

Wade said they won't be able to afford that increase if it happens. She told WPTV they've been trying to save to buy a home but getting financing would be tough right now. 

"We both work full time and the money that we make goes right into the bills, right into rent, and we're left with very little," Wade said. 

One new avenue a lot of people are using to buy a home right now is through what is called a cash for deed transaction, making the market even more competitive. 

The property is transferred from seller to buyer without involving a lender, like a bank. 

South Florida rent increase, largest in nation in last year
South Florida has experienced the largest rent increase in the nation since last year.

Instead, the buyer makes their payments directly to the seller who retains the home's title until the final payment is made. 

"This market currently is unprecedented," Greg Downs, a mortgage loan consultant with New American Funding, said. "In previous years, 90% of transactions, or greater, involved mortgage financing."

Downs told WPTV that right now buyers are getting aggressive and creative. Besides the cash for deed avenue, buyers are offering 10% above the asking price in cash and giving larger escrow deposits.

While this makes the offer much more appealing to the seller, it has also created an extremely competitive marketplace. It's the wild west when it comes to buying a home these days. 

"If you were to look in the first quarter of 2022, in certain pockets of Palm Beach County and other areas of the country, we've seen as much as 60% of transactions be actually cash purchases," Downs said. 

Greg Downs, a mortgage loan consultant with New American Funding
Greg Downs explains how a cash for deed transaction is allowing homebuyers to purchase houses.

So, his company is making the process much easier and more realistic for the average home buyer. 

They helped launch a nationwide cash buying program called Buyer Accepted to help traditional buyers compete in the current market. 

"We will help facilitate the cash purchase of a home on our borrower's behalf and then bring the mortgage financing in behind it," Downs said. "It's been very successful."

They buy the home upfront with cash and then sell it to the buyer with financing. 

Buyers first have to be approved for the program. It's something Wade said she might consider down the road. 

"Those people have a lot of money in their pockets, and they are making cash offers three times what someone like me can do," Wade said. "They will never, never look at someone like me and take my offer when they could have all of that money in their pockets."

Wade told WPTV that while waiting on her landlord to release details about a possible rent increase, she is working on getting on a waitlist for workforce housing for teachers.


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