Why do auto dealerships balk at cash transactions, but real estate companies prefer them?
In: Economics
For autos… The markup in cars is awful. The manufacturers have greatly reduced profits, buyers are more savvy with internet pricing and competition is higher than ever.
Banks will give dealers a little bit of money for utilizing them. Some banks will base this off of the amount financed where smaller loans pay the dealer $100 and larger loans can be up to $500.
It’s also easier to provide the buyer with beneficial protections. A warranty is a lot easier to sell at $50 per month instead of trying to pry $3000 or more from the buyer at the time of closing.
For homes… you aren’t buying from a dealer. You’re buying from a person or a family. The agent just helps facilitate that. Both parties want their money asap! Neither want to wait for funds of hundreds of thousands of dollars. Mortgages take time and often get complicated. Cash is quick and damn near fool proof making it desirable for everyone involved
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