Yes — cash sales are common in LA multifamily and often close faster than financed sales. Institutional buyers, private equity firms, 1031 exchangers, family offices, and high-net-worth individual buyers all frequently purchase with cash. What you should know is that cash buyers typically pay somewhat less than financed buyers, because the speed, certainty, and flexibility they provide has real economic value to sellers — and the cash buyer captures that value. Cash is not magic. It is a tradeoff between price and certainty.
Cash removes lender contingencies. A financed buyer's deal can fall apart if the lender's appraisal comes in low, if loan processing takes longer than expected, or if the buyer's financial situation changes during underwriting. Cash buyers eliminate these risks.
Cash closes faster. Without lender diligence and appraisal timelines, cash deals can close in 15-21 days. That speed has value to sellers facing deadlines (1031 clocks, estate liquidity needs, time-sensitive capital deployment).
Cash buyers have fewer conditions. Financed purchase agreements contain financing contingencies that protect the buyer if their loan does not materialize. Cash buyers don't need these protections, making their offers more certain. Because of these advantages, cash buyers typically pay 3% to 8% below what a financed buyer would pay for the same building. Some sellers see this as a discount; more accurately, it is the price of the speed and certainty the seller receives in exchange.
Time-sensitive transactions. 1031 replacement deadlines, estate liquidity requirements, specific capital deployment needs. When speed matters, the cash discount is often cheaper than delay or deal failure.
Risk-averse sellers. Some sellers prioritize certainty of close over maximum price. The cash buyer's deal is more likely to close than a financed buyer's.
Complex transactions. Buildings with complicated diligence, unusual title situations, or other factors that might slow a financed transaction. Cash buyers can absorb complexity that financed buyers cannot.
Market uncertainty. In volatile interest-rate environments, cash buyers are less affected by rate changes than financed buyers. In uncertain conditions, cash closings have specific value.
Maximum-price-focused sellers. If the seller's primary objective is the highest possible sale price and they have no time pressure, the financed buyer pool is typically where the highest offers live. Institutional financed buyers in competitive bidding on a well-prepared clean building produce the top end of the pricing range.
Straightforward deals with clean preparation. When the deal has no unusual complications, the speed advantage of cash is smaller. A well-prepared financed deal may close only a few weeks slower than a cash deal, making the cash discount less justified.
Strong institutional bid depth. When the specific building attracts deep institutional interest, the financed buyer pool often produces the best pricing even accounting for timeline differences.
Ask three questions:
What is the time-value of the faster close? If the seller has no time pressure, the cash buyer's speed advantage is worth less. If the seller is facing a deadline, speed has significant value.
What is the probability of the financed deal actually closing? A financed deal with a strong buyer, clean diligence, and standard financing has a high close probability. A financed deal with a weaker buyer or unusual circumstances has a lower probability. Expected-value analysis treats the cash price and the financed price differently based on close probability.
What is the pricing differential? If the cash offer is 3% below the financed offer and the financed deal is 95% likely to close, expected-value favors the financed offer. If the cash offer is within 1% and the financed deal has more uncertainty, the cash offer may be better on an expected-value basis. The right choice depends on the specific circumstances of the transaction.
Cash is one of several tools in LA multifamily transactions. It is not inherently better or worse than financed — it is different, and the right choice is specific to the seller's situation. For most LA multifamily sellers without specific speed needs, the financed buyer pool produces the strongest pricing. For sellers with time pressure or complexity concerns, cash buyers provide specific advantages worth the pricing concession.
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How much faster does a cash deal close?
Typically 2-4 weeks faster than a comparable financed deal. Cash deals can close in 15-21 days; financed deals typically close in 30-60 days.
Are all-cash offers always lower than financed offers?
Usually yes, by 3% to 8%, but not always. On specific buildings with specific buyer situations, a cash offer may come in competitive with or above financed offers.
Should I only consider cash buyers?
Not usually. Limiting the buyer pool to cash-only buyers artificially narrows price discovery. Considering both cash and financed offers typically produces better net outcomes.
Michael Sterman is Senior Managing Director Investments at Marcus & Millichap.
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