- Press Release Distribution

All-cash home buyers pay 10% less than mortgage buyers

Reducing the friction between mortgage buyers and sellers could go a long way in promoting home ownership, according to new UC San Diego Rady School of Management research

( Owning a home has long been considered a crucial way to build wealth, but making such a purchase has become increasingly difficult for many residents. In addition to steep housing prices and high interest rates, there have been a growing number of all-cash buyers who can close a deal quickly, beating out competing offers from buyers who need to finance their home with a mortgage.

The convenience and certainty of all-cash offers appeals to sellers so much so, that they pay on average 10 % less than mortgage buyers, according to a new study from the University of California San Diego Rady School of Management.

“When sellers accept a mortgage offer, it comes with risk,” said Michael Reher, study coauthor and assistant professor of finance at the Rady School of Management. “There is a risk the deal will fall through because there’s a third-party mortgage lender who needs to approve the loan for the borrower and there are other caveats such as issue the appraisal, or inspection, which is why around 10% of transactions fail when the buyer is paying with a mortgage. We find sellers are willing to leave money on the table to avoid the risk.”

The study, forthcoming in the Journal of Finance, finds that while 10% is the average difference between mortgage and cash buyers, it does not necessary apply to all buyers who need to purchase a home with a loan. For example, mortgage buyers with a relatively good borrowing profile pay only 6 % more than all-cash buyers, especially if the sale is taking place in an area where most real estate transactions are successful.

In areas where there may be more low-income buyers and mortgage transactions carry greater risk, a mortgage buyer can expect to pay up to 17% more, if the seller has a competing offer from an all-cash buyer.

“Considering that about a third of home purchases are all-cash deals, these differences are highly relevant for real estate market participants,” said Rossen Valkanov, study co-author and professor of finance for the Rady School. 

He added that understanding the "cash discount" in real estate is important because it highlights the friction between mortgage buyers and sellers.

 “In policy terms, U.S. taxpayers subsidize $8 trillion of mortgages to promote homeownership,” Valkanov said. “If policy makers made it easier for mortgage buyers to close escrow, it could be a more cost-effective route to promoting homeownership than subsidizing mortgages for first-time homebuyers.”

An example of reducing friction between mortgage buyers and sellers could be reducing the degree of “ambiguity” about the home sale process, from the standpoint of home sellers. This could potentially be achieved by requiring listing agents to make sure that home sellers are well-informed about the amount of risk and the time to close when accepting an all-cash versus a mortgaged offer. 

“At the time a mortgage offer is submitted, a listing agent can disclose an easy-to-understand statistic, such as: ‘over the last 12 months, 97% of mortgage offers resulted in a sale after 60 days,’” Valkanov said.

The implications of a liquid housing market edging out many first-time buyers

Most first-time home buyers have to finance the purchase with a mortgage and the 10% “cash discount” all-cash buyers receive represents another hurdle in a competitive real estate market. In California for example, where inventory is low,  the average age of the first-time homeowner is now almost a decade older compared to the 1980s.

But it has other implications for real estate. The increase in buyers with deeper pockets choosing to finance homes with cash because of higher interest rates also equates to a greater number of buyers possibly getting real estate at prices below the property’s actual value. Therefore, a liquid housing market with more all-cash buyers may erode the value of real estate as a savings vehicle, the authors note.

Reher and Valkanov embarked on the study after they both had experienced mortgage offers to homes being rejected because sellers went with an all-cash offer instead.

They replicated the findings in three different studies with the first assessing data from 2 million home sales across more than 90% of U.S. counties from 1980 to 2017. The data from county recorder offices revealed that mortgage buyers paid on average 11% more than all -cash buyers.

The second study utilized data from Redfin which provided the authors with information on more than 20,000 home sales as well as offers on homes that were sold from 2013 to 2021. This data set revealed mortgage buyers paid 8% percent more than all-cash buyers.

The third study involved an experimental survey designed by the authors where they asked 3,000 independent homeowners to imagine scenarios where they had to sell their home and received two competing offers—one from a mortgage buyer and one from an all-cash buyer. The responses revealed that the participants would only accept the mortgage buyers offers if they had paid on average 10% more than the all-cash buyer.

To read the full study, “The Mortgage-Cash Premium Puzzle,” go to this link.




Must mRNA be cloaked in a lipid coat to serve as a vaccine?

Must mRNA be cloaked in a lipid coat to serve as a vaccine?
The Uchida Laboratory (Lab Head: Prof. Satoshi Uchida, Department of Advanced Nanomedical Engineering, Medical Research Institute, Tokyo Medical and Dental University; abbreviated as TMDU) of Innovation Center of NanoMedicine (Center Director: Prof. Kazunori Kataoka, Location: Kawasaki, Japan; abbreviated as iCONM) has demonstrated that intradermal administration of mRNA alone (naked mRNA) without protected by nanoparticles induced robust vaccination against SARS CoV-2, a virus causing COVID-19, in mice and primates, ...

Infant gut microbes have their own circadian rhythm, and diet has little impact on how the microbiome assembles

Infant gut microbes have their own circadian rhythm, and diet has little impact on how the microbiome assembles
Infant gut microbiomes oscillate with a circadian rhythm, even when they are cultivated outside of the body. Researchers report April 2 in the journal Cell Host & Microbe that the rhythm is detectable as early as 2 weeks after birth but becomes more pronounced with age. The finding comes from a randomized controlled trial that also showed that diet has less impact on the development and composition of the infant microbiome than previously thought. “We found that even at very early ages of colonization, the microbial ecosystem develops this circadian rhythmicity,” ...

New study finds triple-negative breast cancer tumors with an increase in immune cells have lower risk of recurrence after surgery

ROCHESTER, Minn. — A new multicenter, international study suggests that people who have early-stage triple-negative breast cancer (TNBC) and high levels of immune cells within their tumors may have a lower risk of recurrence and better survival rates even when not treated with chemotherapy. The study was published in the Journal of American Medical Association (JAMA). TNBC is a breast cancer subtype that does not respond to drugs that target the estrogen receptor or the HER2 protein. It grows rapidly, is more likely to spread beyond the breast before diagnosis ...

New insights into how tumors on adrenal glands develop

New insights into how tumors on adrenal glands develop
Fukuoka, Japan—Researchers from Kyushu University's Faculty of Medical Sciences report on new insights into the mechanisms of how adrenal gland tumors are formed. The team identified a new type of tumor cell population that they termed 'steroids-producing nodules' or SPNs, that exhibits the unique characteristic of producing two different hormones. Specific structures in SPNs were found to lead to cortisol-producing adenomas, or CPAs, noncancerous tumors that produce excessive cortisol. Their findings, published in eBioMedicine, ...

Ask Chat GPT about your radiation oncology treatment

  · AI responses to common patient questions were on par or exceeded answers from professional societies · Goal also to reduce clinician workload and burnout · More than 60% of cancer patients require radiation oncology treatment CHICAGO --- Cancer patients about to undergo radiation oncology treatment have lots of questions. Could ChatGPT be the best way to get answers? A new Northwestern Medicine study tested a specially designed ChatGPT to see if it could successfully provide answers to patients’ common questions about radiation oncology. Patients may be too overwhelmed to address all their concerns during a clinical visit ...

Surveillance colonoscopy findings in older adults with a history of colorectal adenomas

About The Study: In this study of 9,740 surveillance colonoscopies among 9,601 adults ages 70 to 85 with prior colorectal adenoma, colorectal cancer detection was rare regardless of prior adenoma finding, whereas the advanced neoplasia yield was 12% overall. Yields were higher among those with a prior advanced adenoma than among those with prior nonadvanced adenoma and did not increase significantly with age. These findings can help inform whether to continue surveillance colonoscopy in older adults.  Authors: Jeffrey K. Lee, M.D., M.P.H., of Kaiser Permanente Northern California in Oakland, is the corresponding author.   To access the embargoed study: ...

Metabolic profile and long-term risk of depression, anxiety, and stress-related disorders

About The Study: High levels of glucose and triglycerides and low levels of high-density lipoprotein were associated with future risk of depression, anxiety, and stress-related disorders in this study of more than 200,000 participants. These findings may support closer follow-up of individuals with metabolic dysregulations for the prevention and diagnosis of psychiatric disorders.  Authors: Charilaos Chourpiliadis, M.D., of the Karolinska Institutet in Stockholm, is the corresponding ...

Wound treatment gel fights the battle against antibacterial resistance

Wound treatment gel fights the battle against antibacterial resistance
WASHINGTON, April 2, 2024 – Hydrogels are popular for use in skin ailments and tissue engineering. These polymer-based biocompatible materials are useful for their abilities to retain water, deliver drugs into wounds, and biodegrade. However, they are complicated to manufacture and not very resilient to external forces like rubbing against clothing, sheets, or wound dressings. They are also not inherently able to battle bacterial infections, so they are often infused with antimicrobial drugs or metal ions, which can ...

Finding the connective tissue of soft materials

The human body uses adhesion to hold itself together. For example, a tendon attaches muscle to bone, while connective tissue attaches muscle to skin.  Hydrogel-based soft materials are based on these biomimetic mechanical behaviors, which makes them a revolutionary design of biomedical implants, human-machine interfaces, and bio-inspired soft robots. However, there are limitations to overcome before they are able to fully replace commonly used hard materials.  Qihan Liu, assistant professor of mechanical and materials ...

Scientists link certain gut bacteria to lower heart disease risk

Changes in the gut microbiome have been implicated in a range of diseases including type 2 diabetes, obesity, and inflammatory bowel disease. Now, a team of researchers at the Broad Institute of MIT and Harvard along with Massachusetts General Hospital has found that microbes in the gut may affect cardiovascular disease as well. In a study published in Cell, the team has identified specific species of bacteria that consume cholesterol in the gut and may help lower cholesterol and heart disease risk in people. Members of Ramnik Xavier’s lab, Broad’s Metabolomics Platform, and ...


New Inflammatory Bowel Disease testing protocol could speed up diagnosis

Most massive stellar black hole in our galaxy found

New review offers first recommendations on accurately assessing the carbon footprint of coffee farming

Seed ferns: Plants experimented with complex leaf vein networks 201 million years ago

New statewide research reveals the staggering economic cost of intimate partner violence in Louisiana

From ashes to adversity: Lessons from South Australia's business recovery amidst bushfires and pandemic

Multiple pollutants from crop and livestock production in the Yangtze River: status and challenges

Unraveling the unique role of DELLA proteins in grapevine flowering: A shift in developmental fate

Next-generation treatments hitch a ride into cancer cells

Unraveling the role of DlBGAL9 and AGL61/80 in Longan somatic embryogenesis and heat stress tolerance: A multi-omics approach

Decoding pecan pollination: A dive into the chloroplast genome of 'Xinxuan-4' and its impact on cultivar diversity and efficiency

KD-crowd: A knowledge distillation framework for learning from crowds

Can animals count?

Australian media need generative AI policies to help navigate misinformation and disinformation

Illuminating the path to hearing recovery

Unlocking the secrets of fruit quality: How anthocyanins and acidity shape consumer preferences and market value

Evidence for reversible oxygen ion movement during electrical pulsing: enabler of the emerging ferroelectricity in binary oxides

Revolutionizing Citrus cultivation: The superior tolerance and growth vigor of 'Shuzhen No.1' rootstock

Family and media pressure to lose weight in adolescence linked to how people value themselves almost two decades later

Despite the desire to reduce the risk of imitation, new research suggests startups should scale slowly and steadily

The Lancet: Many people with breast cancer ‘systematically left behind’ due to inaction on inequities and hidden suffering

From opioid overdose to treatment initiation: outcomes associated with peer support in emergency departments

NIH awards $3.4 million to Wayne State University to investigate biomarkers for better reproductive success

New study shows corporate misconduct at home hurts sales overseas

Take it from the rats: A junk food diet can cause long-term damage to adolescent brains

Fralin Biomedical Research Institute team unpacking genetic mysteries of childhood epilepsies

UNC-Chapel Hill researchers discover new clues to how tardigrades can survive intense radiation

UT Arlington prioritizes entrepreneurship efforts

Ochsner Health receives 2024 Top Workplaces Culture Excellence Awards

Are these newly found rare cells a missing link in color perception?

[] All-cash home buyers pay 10% less than mortgage buyers
Reducing the friction between mortgage buyers and sellers could go a long way in promoting home ownership, according to new UC San Diego Rady School of Management research