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Homeowners in Utah’s red-hot housing market are likely familiar with the offer.
It’s stuffed into mailboxes, resting under letters and bills. It’s advertised on signs stapled to neighborhood utility poles. The wording varies, but the message is the same: We’ll buy your house for cash, completely hassle-free — no need for repairs, inspections or fees associated with hiring a real estate agent.
“I would say for every 800 flyers I send out, I probably get one call,” said Alan Larsen, a West Jordan-based real estate investor.
One Sugar House homeowner received 10 such flyers in the mail in a matter of weeks this fall. Some were printed in a font that appeared handwritten. One even had a picture of the home printed on it.
The face behind the flyer
Utah cash buyers seem to take on two molds: real estate investors and everyday homeowners.
Some, like Paul Coon, are real estate agents looking to buy and rehab homes for profit. Coon has worked in real estate since 2001 and is currently a broker for PRC Realty. But on the side, Coon and his family flip homes through his company, Utah Quick Sale.
“We’ll take a property that’s less desirable,” Coon said, “and our goal is to actually make it basically the nicest property in the neighborhood.”
Coon primarily works with people who want to sell their home but can’t afford the repairs and fees required to list it on the market. Many of his clients are over age 50.
He compared his side business to trading in cars to a dealership: People know they may not be getting the best value, but they can get a problematic vehicle off their hands.
“It is not worth the time. The money is not there,” Coon said. “So that’s really what we offer, is convenience.”
For Larsen, who is a real estate agent with Equity Real Estate Premier Elite, cash buying is an investment opportunity. He usually funds his own investments but also works with other investors on larger projects like multiplexes.
Last year, Larsen bought a home that was previously rented to tenants who were using methamphetamine inside, making it difficult to list. For about 97% of people, Larsen said, listing a home on the market will bring in the most money, but for problem houses, sellers may prefer to cash out and move on.
“This service does not makes sense for everybody,” Larsen said. “Sometimes, when people call me, their house is in really good shape ... and I always tell them, ‘Hey, it’s better off if you just list it.’”
While Coon and Larsen both run small operations and do most of the legwork themselves, there are larger companies in Utah — with teams of agents, subcontractors and investors — who buy and sell homes on a larger scale, including Utah Fast Cash Buyers, which did not provide an interview for this story.
Prominence in Utah
Cash buyers have always played a role in the state’s housing market, according to Dejan Eskic, a senior research fellow at the University of Utah’s Kem C. Gardner Policy Institute.
But they surged in Utah after the Great Recession, Eskic said, accounting for 23% of all home sales in February 2013, a statewide record.
“And that was because there were huge foreclosures,” Eskic said, particularly between May 2010 and about 2014. At the time, a frenzy of investors picked up property for pennies on the dollar. New-home construction also ground to a halt, creating a housing deficit as families continued to grow.
From 2017 to 2020, renewed construction began to alleviate the inventory problem. But the pandemic sparked a supply shortage, which again slowed builds.
In this year’s third quarter, Salt Lake Valley home sales decreased. But the percentage of homes sold for cash increased — from 10% up to 15% — during the same period, according to the Salt Lake Board of Realtors.
The prominence of cash buyers in Utah continues to surge, leaving house hunters competing with cash offers amid limited inventory. Some real estate agents are even accepting cash offers before homes hit the market.
Eyes on equity
The median price of homes in Utah jumped by 30% from June 2020 to June 2021, the Utah Association of Realtors reported. As of October, the median cost of a single-family home in the state is $460,000, according to a housing report from the Kem C. Gardner Policy Institute.
“We’re still moving at a record pace,” Eskic said.
It’s not just wealthy transplants who are driving up home prices, Eskic said. “It’s also us.”
He noted that price appreciation during the pandemic led to equity increases. If someone bought a home along the Wasatch Front in 2001, for example, that home is “probably worth $700,000 now,” he said.
During the Great Recession, homeowners accepted cash offers to avoid foreclosure. Now, they are taking advantage of the uptick in home values.
From 2020 through August 2021, Utah went from 3,600 cash buyers to nearly 5,800 — breaking a statewide record for the number of homes sold for cash, though the overall percentage was fewer than the 2013 record due to increased inventory.
By year’s end, Eskic predicts, roughly 7,000 homes will have been sold for cash in the state.
“Household budgets are really strong. Some of the strongest we’ve seen in our history,” said Eskic. “So that’s reflected kind of in this run-up of housing prices and the low interest rates.”
Will the cash craze continue?
Nationally, about 23% of all homes are sold for cash. So far this year, 17.9% of Utah home sales were cash offers, Eskic said.
“From everybody I’ve talked to that’s been in the business for, you know, 30 or 40 years, they’re saying now is probably the most competitive time they’ve ever seen,” Larsen said, “especially in Utah.”
Large, online real estate companies, also known as iBuyers — including Zillow, Redfin and Opendoor — have also emerged in urban housing markets. In 2019, Opendoor began buying homes in Salt Lake City that were built after 1960 and worth between $150,000 and $500,000. The company expanded to Provo and Ogden in 2021.
But iBuyers make up fewer than 2% of the Utah housing market, according to the Kem C. Gardner Policy Institute.
House hunters and local investors are the main players in the game. With homes appreciating so quickly, Larsen said, “if you buy a property, it’s been kind of hard to lose money on it.”
It’s also easier to close a deal with a cash offer, Eskic said.
Utah’s hottest cash-buying market is in Summit County, where the median price for a home is $1.5 million. As of October, 45% of Summit County home sales have closed on a cash offer.
“We have a quarter of the inventory we normally have,” Jen Kelly, a real estate agent in Park City, said. “And I have about a dozen clients that would buy today if I had a great house for them that was, you know, $3 million to $5 million.”
Don’t get duped
Most area buyers — cash or otherwise — are willing to purchase fixer-uppers right now, taking whatever they can get at a time when homes are only staying on the market for a median of six days, said Matt Ulrich, president of the Salt Lake Board of Realtors.
But sellers should be wary of cash offers, Ulrich said, because investors are often looking for deals and may be inclined to take advantage of homeowners. He noted that cash buyers often advertise that they don’t charge commission, but they can still charge fees that quickly add up.
“Anybody looking to sell their home, I would highly encourage them to reach out to a professional agent,” Ulrich said, adding that most real estate agents will determine what work a home may need — and how much it may sell for — for free.
Larsen includes a disclaimer on his mailers that notes selling a home for cash may not be the homeowner’s best option. He said he does that because he’s seen investors lie to sellers in the past.
Coon, another cash buyer, said he gets a lot of angry phone calls from people who think he’s running some kind of sleazy business. He believes they misunderstand the work he does.
“I can honestly say I’ve never taken advantage of anybody,” Coon said. “The majority of people I help know full well what they’re doing.”