For Portland Condo Shoppers Cash Is King
Paying All Cash Can Make All The Difference
Buying a property all cash, means less contingencies, fewer hassles for the seller and a greater likelihood that the deal will go through. Sellers typically reward this behavior, especially if the seller is a bank or the latter has a major stake in the sale i.e. short sales. Cash buyers also have a significant advantage on new construction condo deals, where financing is all but impossible for buildings that aren’t at least 50% occupied and/or located in a declining sub-market.
Cash Buyers On The Rise, But Not (Yet) The Norm
Although cash buyers are on the rise, the majority of transactions are still financed one way or another (conventional, FHA etc). Out of the 120 or so condos that sold in Portland’s city center over the last three months, roughly 50 were all cash. As the market tightens these proportions are likely to shift in favor of cash buyers. Given the scarcity of jumbo loans, cash buyers are already the dominant force in the higher price ranges. Thus, the average cash transaction for a city center condo (over the last 3 months) was just under 500k, whereas conventionally financed properties on average went for 360k.
Cash! Here’s What It’s Worth To The Seller
Money talks, but not everybody speaks the same language. While some cash buyers have achieved discounts of as much as 15% over list price, the current average is 7 per cent – only slightly better than the 4% achieved in the conventionally financed department. As always, it pays to know the seller’s circumstances.
Among the developments struggling to boost occupancy rates, The Encore and 937 pretty much take the top spots. Not surprisingly, cash buyers are particularly welcome here.
Consider this scenario at 937:
Three months ago, unit #434 sold pretty much at asking price for just over 300k. Not bad for a 1,000 SF, true 1-bdrm in the Pearl District. The deal was financed with a conventional mortgage and closed in just over a month.
Then, last week unit #334 sold. This is the identical unit – one floor down. The buyer paid all cash and closed the deal in less than a week at 270k – 10% less than the comp. Granted, there needs to be some adjustment for being one floor up, but it ain’t 30 grand.
Similar situations are unfolding elsewhere.
Here’s what’s happening at the John Ross: the asking price on a roughly 800 SF unit on the 16th floor is 236k. The same unit one floor down is open to cash buyers only. The bank is asking for 201k or 15 per cent less than the comp. Why such a gap? Financing can be particularly tricky at the Ross, not least due to the in-house insurance policy.
Interested in other cash deals in the Portland metro area? Drop me a note!
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