So the question is: “How much of a discount should someone expect with a cash purchase on a Boston condo?”

I’ve noticed a trend lately in the Boston real estate market. We are running into a lot of multiple offer situations. I’m hearing it from my buyer’s agent team and I’m even starting to get the question more and more in my initial consultations with buyer clients, mainly due to the news of a Boston condo inventory shortage.

So I did an informal study of the Back Bay condo market to see what the statistics show. I used the Multiple Listing Service, which is the database that all agents list properties and report sales that have come to the market. Over the last 6 months there have been 251 condo sales in the Back Bay.

Out of those 251 sales, 52 or approximately 20% sold at or over asking price. As the prices went up I expected to see very few sales that went for asking or over, but interestingly there were 19 sales over 1 million that fit this criteria. Typically a sale at or above asking means there’s been multiple offers.

Additionally, a full 17% of those 251 Back Bay condo sales were reported as cash sales.

I recently worked with a cash buyer. We looked at several condos in the Back Bay and South End. There was a property that would work although the location of the condo within the building was not ideal. After contemplation my clients decided to put in an offer.

All cash. 30 day closing.

There were some negotiations and we went to sleep with an offer $30,000 below asking. In the morning, I received a call from the listing agent. They accepted another offer also cash that came in higher! Never even received a call stating that another offer came in. I tried to prepare the buyer in my initial consultation that this could happen during negotiations but it was hard to believe a counter offer was not requested.

Round 2. I recommended a few condos we had not seen yet. The buyers loved one of the condos and it was priced right. The listing agent let us know that someone else had looked at the condo 4 times and they were expecting an offer. We wrote up an offer $20,000 below asking price. Again, all cash.

Later that day I received a call that the other offer had come in not all cash but highly qualified (code for a good down payment). The seller wanted the highest price and did not care that one was cash. I went back to my buyers who loved this condo and did not feel the hesitation they had on the first property.  We went back $1000 over asking and this time we got the condo.

My buyer asked me “What happened to my cash discount?”

It’s just not that kind of market. I am covering this in my initial consults with buyers but I think the buyers need to experience the current market conditions in Boston to really understand. They have to see enough condos to understand what they get for their dollar and be prepared to possibly go over the asking price depending on the condo. The second condo in this scenario was priced fairly and my buyers had seen enough that they could make a quick decision. And make the right decision for them.

So maybe there is not a discount for cash in this current market, but all things being equal a seller is usually will take a cash offer. In the end, you will have a better chance of getting the condo, but not for much (if any) less than an offer with a mortgage contingency.

Are you looking in a different location in Boston? Please contact me. I would be happy to run similar statistics for you.