Stats on cash offers in Austin?

3 Replies | Austin, Texas

I was wondering if anyone had any stats or data on cash offers in the Austin area? My gut feeling is that cash offers would win in multi-offer situations at a much higher rate and could sometimes command a discount to traditional financed offers.

Has anyone looked into this? Or has experience in multi-offer situations in Austin? Would prefer some hard data but also welcome to some anecdotal evidence (n=1) haha

@Louis Wilson

Cash offers aren't subject to buyer loan approval or appraisal conditions. Cash offers can usually close more quickly than a financed offer. There's also no lender involved, which is one less participant to potentially cause problems. And, overall, sellers typically consider cash buyers to be financially "stronger" than financed buyers. So, in a multiple offer situation, it's usually in the seller's best interest to accept a cash offer over any financed offers that are otherwise sufficiently similar in terms.

However, it's very rare that the only difference between two offers is that one is cash and the other isn't. The seller's decision usually comes down to the bottom line on the net sheet plus a number of very important qualitative factors or "intangibles." These include the experience, reputation, and behavior of the buyer agents, lenders, and escrow officers involved. The listing agent must get a read on how likely it is for each competing offer/buyer actually to make it to the closing table at the original terms.

There's a ton I could unpack here, but I just wanted to make the point that it's not so simple as "cash is king." Five of my Austin buyer clients so far this year have faced multiple offers, including two 10+ offer situations, and won with financed offers in the face of one or more cash competitors. There are ways to craft, position, and present financed offers that make them very similar to cash offers. Moreover, most sellers are savvy enough to appreciate that there are plenty of situations where it's in fact in one's best interest to accept a financed offer that is lower than a cash offer.

@Louis Wilson That would be a good study but I don't have time for that sorta research as that would require rigorous analytics. I can provide anecdotal information but that is a small representation of the entire market. For the year 2018 there were 34,435 sales for single family housing, condos and townhomes which is just the mls only. That doesn't reflect off market deals. It also doesn't include multifamily in the 2-4 family range. I wish that I had the majority of sales of the 34,435 sales to give you an good reflection of the cash vs mortgage market : ) If you have access to the mls then you can do searches of sold terms where you can plug in various financing mechanisms to figure it out. You can also do a longitudinal study as well to give you a great idea. 

In my experience, cash is easier to close than conventional. Generally one can get a better deal if its all cash but it really depends upon the motivational factors from the sellers perspective. I don't know what the average discount is though. I don't have the software anymore to dump data into and run an analysis. Its a curious thing.   

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@David Ivy . Thanks for info. Definitely helpful to know it's more complicated than just "cash is king."

@Aaron Gordy . I don't think I have access to MLS (but maybe I am wrong about that? I am a licensed mortgage broker, not a real estate agent). If you provide the data, I'll provide the analysis haha

If you don't mind me asking, were you involved in any multi-offers last year? Trying to get a sense of whether the cash offers beat out the financed offers (but as David said, there is more than one variable at play). Want to get an idea of the stats for some of my marketing material. I know you didn't do all 34,435 deals last year but I'm sure you have a decent sample size ;-)