We recently lost on a cash offer on a Monte Serreno home where we wrote an offer at $1.5M on a home that was listed at $1.55M, but our offer had no contingencies and we had agreed to close in 7 days from the contract date. But the home sold for $1.69M and closed in 3 days.
So, we wanted to know what is going on with the cash sales and what percentage of homes are selling for cash in Santa Clara county. This information is important for 2 main reasons since we will need to provide this information to our buyers so they would recognize the type of market we are dealing with where offers blow asking price are not going to have a chance. Another reason we that if we are representing non-cash buyers, we need to develop a different strategy for these buyers to have a chance to compete with cash buyers.
According to MLS there was 306 homes sold in the past 90 days in Santa Clara County for prices of homes above $2M that were all cash and no contingencies. That’s more than 61 million dollars of real estate transactions in 90 days. And with homes fetching 93% or more of their list price, the sellers market is very strong.
However, the big elephant in the room is the interest rates. If the rates continue to rise, the market will sour and more buyers will be pushed out the market since despite strong cash sales, only 36% of total market sales in Santa Clara County are cash sales. That means that majority of buyers are still relying on a real estate mortgage to be able to buy their home.
Another catalyst in the rise of home prices is the continued presence of 1st time home buyers and even the smallest rise of interest rates will push more of these buyers out of the market.