As the housing market across the country continues to rebound, many areas have become “seller’s markets” – a market in which there are more buyers than there are homes for sale and where sellers are more likely to have their choice of buyer and to be able to dictate more attractive options for themselves, rather than buyers being able to dictate terms that are beneficial. In many of these markets, buyers have to content with and go up against offers of “all cash”, where the other buyer won’t be taking out a mortgage and will instead be handing the seller a lump sum of cash for the purchase of their home. How can you combat an all-cash offer? It is possible to submit an offer that’s more attractive than an all-cash offer, one that will get you into the home of your dreams. We’ve compiled our top 3 strategies to beat an all-cash offer so that you get into the home of your dreams, which can be found below.
Be ready to move quickly – have your ducks all in a row
Even though someone is offering all-cash, there may be reasons why they couldn’t move on a sale right away. They may be offering all-cash but will need time to withdraw it from one account and transfer it to another, they may want (or need) time to sell their current home and move or they may have personal reasons to ask for a delayed closing date. Use those potential delays to your advantage and be ready to move quickly with your offer! Make sure you are pre-approved and have all your paperwork in order so that your mortgage officer can process your loan quickly. Research home appraisers and inspectors and have a couple of each on standby so that you can arrange to have those appointments set up very quickly after you submit your offer. By showing the seller that you are motivated, you may be able to overcome the flashiness of an all-cash offer.
Make yourself known to the seller / include a personal story or note with your offer
Although some areas have strict rules governing the types of interactions that prospective buyers can have with sellers, many times putting a personal touch on your offer can go a long way. Are you looking to buy the seller’s home because you can see yourself playing catch in the backyard with your kids? Because it’s near to your aging parents who you take care of? Some seller’s can be influenced by these stories, and because their house has been their home, they may favorably look to sell to someone who has similar ideals, goals and dreams for the house. Speak to your agent before contacting a seller directly – but don’t automatically dismiss the idea of sending a card or letter explaining why you want to buy the house.
This one can be tricky because who has tons of extra cash lying around, or who wants to pay more for a home? Not many of us. But, if a buyer comes in with a low but all-cash offer, you pay be able to beat that offer by offering more for the home. You’ll need to take into account the appraisal value of the home, as that will often drive how much mortgage you can be offered, but if the home is appraising higher than the asking value, or you are able to increase your down payment, a higher offer may beat out an all-cash offer.
If you live in an area where a lot of all-cash offers are being made, don’t count yourself out. While it’s true that many sellers will look at an all-cash offer as less risk and will gravitate towards that solution, there are ways to beat out an all-cash offer.