Blog Post

All cash buyers are on the rise in the Los Angeles luxury real estate market. Last year, in the Los Angeles million and up market, 29.9% of buyers paid all cash. This number is the highest percentage since 2004 and is more than double the average for cash sales over the past 10 years.

This trend towards cash buyers has several driving factors. There is no hiding the fact that since the mortgage melt down, buyers have had difficulty securing loans from lenders. This is also true for even the most substantial financial buyers. Many wealthy buyers would rather pay cash than risk the prospect of being turned down because of the much more difficult qualification processes. The rise in all cash sales can also be attributed to the fact that many investors believe that home sales have reached, or are very near, the bottom. Investors are turning to the real estate market as a place to “park their money.” Many believe and that real estate will out-perform other financial investments. Investors are buying property and counting on home prices going back up.

Cash sales can also have other advantages. Sellers know that a sale that involves a cash buyer has a greater chance for a successful close. Cash buyers have a leg up on the buying side over traditional buyers, they hold more sway in negotiations, and are on average able to negotiate approximately 10% off asking prices.

Posted 25th March 2011 by Sally Forster Jones