We recently added a view of the cash buyer market to our monthly home and condo reports - and the results provide some interesting takeaways for both buyers and sellers. Here's a quick summary of our findings.
Cash offers are common in the condo market.
Overall, 1 out of every 5 Madison condo sales through the month of October have gone to cash buyers. This is below the historical high of 26% in 2012. Cash offers peaked 5 years ago when Madison condo prices bottomed out.
Takeaway: Based on current market trends, buyers and sellers should expect at least one cash offer whenever multiple offers are submitted for a condo listing.
Cash offers are most common with higher priced condo listings.
Baby Boomers are the key drivers of this trend. Right now there's a large pent-up demand from Boomers who are looking to downsize from their single family home into a nice condominium which has most of the living space on one level. Many of the buyers in this demographic have large savings accounts and are happy to pay cash when the right condo listing hits the market.
Takeaway: Condo listings that appeal to down-sizing Baby Boomers are great candidates for cash offers.
Cash offers are less common in the single family home market.
Just under 10% of all Madison single family home purchases go to cash buyers - with the highest percentage of cash offers occurring in the $150,000 and under price category. In contrast to the condo market, most of the cash offers in the single family home market come from investors and "flippers".
Takeaway: Buyers who are using a mortgage to purchase an affordable home should expect competition from cash buyers.
Tips for Madison sellers
Most sellers prefer the simplicity and security of a cash offer over the offer that relies on traditional financing. Sellers can increase their odds of receiving a cash offer by attracting multiple offers to their listing. For more info, check out our 4 tips for attracting competing offers to your sale.
Tips for Madison buyers
Knowing when a listing is likely to receive a competing cash offer is crucial in our highly competitive market. For this reason we recommend working with an experienced buyer agent or buyer agent team. For more info on how you can succeed in a competitive situation, take a look at this article which offers 15 tips for writing a winning offer.
Do you have questions about buying or selling in the Madison, Wisconsin area? Contacts us 24/7 with your questions and concerns.
This article is published courtesy of: Dan Miller, REALTOR Mad City Dream Homes & RE/MAX Preferred