Are You A Cash Real Estate Buyer? So Is Your Competition!

June 26, 2009

Real estate buyers in Phoenix have a lot of cash and are using it to acquire properties, especially in the lower price ranges.

59% of the homes sold under $100,000 were cash purchases.

In most market if you are a cash buyer your are king or queen: especially in a market where financing becomes difficult like the one we have now in mid 2009, but the reality is quite a bit more complex: especially when being a cash buyer does not make you a stronger buyer then competing buyers for a limited stock of real estate.

Below we look at just how many cash buyers there are. Before we start: the data is only as good as the people who input it into the system. All these numbers are based on the ARMLS in Maricopa County. At closing the listing agent inputs what type of financing if any was used by the buyer and this data, though for the most part reliable, cannot be fully infallible.

Since May 1st 2009 to date of publication: 13,515 single family homes sold in the ARMLS system. Of these, 4,865 were noted to be cash purchases. That is 36% of the transactions were cash.

Cash purchase prices ranged from a measly couple of grand to a high of over $7,200,000.

800 of the 1,427 town-home, patio home and condos were cash purchases.

Once the price goes down the percentage of cash sales goes up. 37% were cash up to $300,000 sales price, 48% were cash for homes up to $150,000 and an amazing 59% of the homes under $100,000 were cash purchases.

That may explain why so many buyers in the lower price ranges are having a difficult time competing for homes in a multiple offer situation.

Even cash buyers, usually very strong buyers, are having to compete against other cash buyers. Much of the advantage of being a cash buyer has disappeared in the lower price ranges: in the higher price ranges where financing is difficult to get, cash still has lots of sway.

Just to satisfy curiosity lets see how many carry-backs there were.

Single family homes: 40 seller carry-backs out of 13,515 sales.

Condos: 4 seller carry backs out of 1,427 sold.

Another interesting fact: 4,141 of the sold homes were FHA loan: these are the 3.5% low down-payment loans.