With the credit landscape continuing to thaw and buyer demand up sharply, sellers are no longer salivating over all-cash buyers. Further, the discount they are giving to cash purchases versus their mortgage-contingent brethren has all but disappeared.
For the cash-rich among you, take heart: places still exist where your cash gives you bargaining leverage:
- New developments: when they’re less than 50% sold, big banks won’t touch them generally; your cash means that the sponsor is one apartment closer to reaching that magical threshold and is likely to give you a discount on it.
- Almost new developments: when more than 10% of the building was sold to any one entity or when rentals in the building surpass 15% of all units, then buyer financing tends to dry up as well. This makes it very difficult for sellers to offload their apartments, thereby having to rely on all-cash purchasers to close the deal.
- Co-ops: yes, there are buildings that are cash-only, where financing is a forbidden concept. Here, cash buys you access more than pricing leverage.