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October 17, 2012

Cash is King for Competition, Not Discounts

Cash buyers continue to infiltrate San Francisco’s competitive single-family home market. But those cash transactions aren’t necessarily translating into deep discounts. Instead, buyers seem to be using the cash advantage to simply win properties.

A total of 180 single-family homes sold over the past month, with 35 purchases made with cash as reported in the San Francisco Multiple Listing Service. Nine such transactions sold for less than the list price, one sold at asking, and 25 were over the asking price. It’s fair to say that many cash buyers are not looking for cut-rate prices on houses here. Buyers and their agents know that cash transactions provide a huge advantage because of the lack of complications connected to appraisals and loans.

One of the most glaring examples of cash buyers not worrying about discounts occurred in the ultra high-end market at 2969 Sea Cliff (above). The 6BR home with more than 5,000 square feet in the tony Sea Cliff neighborhood was listed at $5,250,000 and sold two weeks later in a cash sale for $5,650,000.

And then there was 1445 Cole in Cole Valley, a 3BR Craftsman listed at $1,775,000 which sold for $1.9M within 10 days.

Several buyers picked up homes in the city’s southeastern neighborhoods of Bayview and Crocker Amazon for all cash in the $300,000-$500,000 range, as well.

Of course, there are always exceptions, and 1915 Pierce was one. The 5BR home in Lower Pacific Heights was listed for $2.4M and sold in 61 days for $2.3M.

Most cash sales involving buyers paying well over list price have been happening either prior to the property going on the market, or shortly thereafter. It’s a buyer’s way of communicating to the seller that he or she won’t get a better offer.

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