You only have your word and some documents and are competing with someone who has all cash to offer? How do you win? Is this winnable? Yes, it is. It's as simple as topping the offer of the all-cash buyer. All cash home buyers paid 23 percent less for single family homes and condos during the first quarter of 2016, according to Realtytrac. Unless the seller has to meet up with some time contingency, he’ll rather sell to you because you will pay more.
Cash is king. "It is easier and quicker. But most sellers, especially since the average homeowner doesn’t have a ton of equity to play with, won’t mind waiting an extra couple of weeks for the loan to be processed, if it means they get any more money at all out of the deal. In my experience, you might get a 5% discount for having cash. Some sellers will be a little more flexible, and some won’t care at all how their home will be paid for” says Katherine Persinger of Persinger group, a real estate brokerage in Everett, Washington.
Having cash gives you an edge but what trumps cash is the level of preparedness of the buyer. Why? Because most sellers still want to make profit on the sale of their home. Potentially, you give them that chance. Here are some things you can do to place your offer above the pack when competing with cash buyers.
Pay Extra: The seller doesn’t gain much with cash buyers. The cash buyer will often make a lower offer because he has the cash. It might sound crazy but to beat the offer, you have to pay more. To increases your chances, top the cash offer. The offer of immediate cash is tempting to the buyer but the offer of extra cash will likely win.
Get Inspection Done Right Away: The best way to show the seller you’re serious is to put your inspector to work within few days of having your offer accepted. This shows the seller you are a serious buyer. The few hundred dollars you will have to spend will be worth it.
Reduce The Loan And Appraisal Contingency Time: In some markets, loans are approved in less than two weeks. Having your lender speed up the loan contingency time will work in your favor. Also verify how quickly an appraiser can be send to your property. Most sellers want fast closing, that’s why they prefer all-cash buyers. If you show that you understand this need and are working towards a fast closing too, the seller will prefer your offer.
Pre-Order An Appraisal: To speed up the loan process, some smaller banks and direct lenders allow you to preorder an appraisal in advance. Although this may not be possible with a bigger lender. If your lender accepts, at the time your offer is written, you can tell the seller that the appraisal has already been ordered.
Present A Well-Structured Offer: An all cash buyer doesn’t need to say much. You as a serious buyer needn’t say much too. Present facts and details to make the seller see you as a serious buyer. Ask your lender to write a pre-approval letter and to verify that you’re a well qualified buyer. Get your agent or mortgage professional to help you with your offer and provide some financial information about you with your offer.
Sellers prefer all-cash buyers because cash is king. But the same cliché also demands that a seller wait for a serious buyer who has the prospects of paying more than settling for a low ball offer.
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