With the percentage of homes purchased with cash accounting for 35 – 40% of the monthly home sales in 2011, paying cash for a home in the Phoenix area is definitely “in” right now.

On the surface, this is a peculiar trend, because the average 30 year fixed mortgage rate is lower now than it was during the boom years of 2005, 2006, and 2007. Since this means the cost of borrowing money is cheaper, generally, you’d expect the incidence of mortgage financing to increase and the popularity of cash purchases to decrease. Instead, it would seem the percentage of cash purchases has increased because of the prevalence of as is bank owned and short sales, which sometimes cannot be financed because of their state of disrepair.

But why should you care about Phoenix real estate trends like these?

If you are a prospective home buyer…

You should know your competition and what they’re bringing to the table. Cash buyers should be aware that having cash no longer makes your offer as rare as it once was just three and four years ago. You may need to work with your real estate agent to find another way to distinguish your offer from fellow buyers. Non-cash-buyers should recognize they have an almost one in three chance of going up against a cash buyer right now. To make your offer stand out, you will need to make sure your Pre-Qualification Form is thoroughly completed, your earnest money offer is strong, and you can close escrow in a reasonable amount of time like 30 – 40 days.

If you are a prospective home seller…

You should discuss the differences between contracts with a financing contingency and cash offers without a financing contingency with your REALTOR® before you list your home for sale. As you might expect, cash buyers negotiate differently than most non-cash-buyers. The more information you gather now, the better prepared you will be when your first offer rolls in, which often happens when you least expect it.

Whatever you do, I hope you will work with someone you trust who can educate you on the latest real estate trends so you can learn from them, and achieve the best possible results in your next real estate transaction.