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The all-cash home sale fading except in high-end markets

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Some Realtors are saying that except for inherited money, the all-cash home sale in San Diego County is all but dead, while others contend that it is still a part of the market.

By Jan McKusick's accounts, all-cash sales in La Jolla have actually increased somewhat over late summer of last year.

McKusick, broker/owner of McKusick & Associates, said more all-cash buyers are stepping up in La Jolla whether the residential unit is a $300,000 to $400,000 condominium "or a multimillion-dollar house."

"We haven't seen a decrease in this activity at all," McKusick said, adding that all-cash deals probably represent 35 to 40 percent of her transactions.

McCusick said all things being equal, a seller will naturally take the all-cash deal, unless there is a question of where the cash is coming from.

Harry Joseph, an agent with Berkshire Hathaway HomeServices in Carlsbad, said all-cash sales have tapered off in recent months, and he is glad.

Joseph -- who referred to house flippers as "heartless bastards," who distort a market -- said he would much rather have a home with conventional mortgage than an all-cash deal any day.

"A lot more all-cash buys fall out of escrow than other sales," Joseph said. "We still see them. There's always some caveat before you close."

Joseph said he has seen cases where it appeared an all-cash buyer had locked up a property, when the funds were in individual retirement accounts (IRAs) that weren't liquid at all.

Walt Tamulinas, president of ERA Eagle Estates in Rancho Penasquitos, said he hasn't seen all-cash buyers acquiring any of the homes he has represented since the first quarter of the year.

"Our market has rebounded so dramatically that they no longer make sense." Tamulinas said. "It's a very healthy market and there's no room for fantasyland."

Paul Tarr -- a broker with Ramona Real Estate in the community of the same name -- said that while all-cash investor sales have fallen away, it doesn't mean these transactions have entirely disappeared.

"People assume that an all-cash sale is an investor sale and it isn't always the case," Tarr said. "There's a lot of inherited money out there … "Not every all-cash sale is about flipping a house."

Eddy Roepke, a Realtor with Century 21 Award in the El Cajon/Rancho San Diego market, said he didn't know too many individuals who could pay cash for a home.

"How many people do you know who can?" Roepke said. "About 80 percent of the all-cash sales we saw involved investors."

Roepke agreed with the others that with prices now stabilized, all-cash sales don't make nearly as much sense today.

"At one point a couple of years ago they represented 30 percent of the market. Right now, the figure is about 18 percent of our sales," Roepke said, adding that many fewer homes are bank-owned today.

San Diego numbers weren't available but CoreLogic (NYSE: CLGX) reported that about 27 percent of sales in California were all-cash transactions in May -- a figure that is higher than residential brokers and agents have suggested here.

Nationally, all-cash residential sales amounted to 34.4 percent of the total sales in May -- down from 37.4 percent a year earlier according to reports from CoreLogic and housingwire.com

That percentage of all-cash sales in May (the latest month available) was its lowest level nationally since May 2010, CoreLogic reported.

Florida had the largest share of all-cash sales of any state at 53.4 percent, followed by New York (50.3 percent), Alabama (48.9 percent), West Virginia (48.3 percent) and South Dakota (46.3 percent), CoreLogic reported.

Even with an improving economy, bank-owned (REO) sales accounted for 55.5 percent of the all-cash sales nationally in May. REOs were followed by standard resale s(34 percent), short sales (32.8 percent) and newly constructed homes (16.8 percent). CoreLogic reported.

"While the percentage of REO sales that were cash transactions remained high, REO transactions made up only 8.2 percent of total sales in May and therefore did not have a large influence on the overall cash sales share," CoreLogic wrote.

"In January 2011, when the cash sales share was at its peak, REO sales made up 24 percent of total sales."

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