The Sofi Group - Luxury Real Estate & Marketing

The residential property market, both luxury condos and homes, and lower-end properties, has been tilted in favor of the buyers over the past couple of years. Lowered prices, tax breaks, abundant supply – all factors played in favor of the buyers. But there are two categories of buyers – the average house-hunters, including those looking into owning a home for the first time, and investors – both foreign and local, flush with cash. The latter have been sitting on the sidelines, waiting for the right time to (re)invest in the real estate market. And it seems that time is upon us.

In the race between financing and cash, cash is emerging as the winner. In December, 22 percent of resale homes across the US were bought entirely with cash versus 16 percent a year earlier. In Miami, this trend is even more evident – all-cash homebuyers accounted for 54 percent of sales in the area in December.

“Even though a first-time buyer may be offering the same price as an investor, or a higher price, the investor has the edge,” says National Association of Realtors researcher Jed Smith. “The investor may actually pay less, but it’s cash, right now.”

Presenting an all-cash offer, with a hefty deposit, shows a seller that the buyer is truly committed to buying the unit. Moreover, the sellers recognize that an all-cash transaction is more likely to go smoothly – the closing process is expedited and the deal becomes less likely to collapse because of financing issues. Thus, the buyer may have more leverage in negotiating a better price.

This trend has been visible in the South Beach luxury condo market – foreign investors, especially Brazilians, Italians and Russians, have been taking advantage of their strong cash availability to buy the luxury condos they’d been eye-ing for a while.