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The Commonwealth Blog

Monday, April 9, 2018

Can You Compete Against Cash Buyers?

In 2017, almost 29% of all U.S. home purchases were made by buyers who paid all-cash.

This statistic may sound disheartening to home buyers who are unable to make an all-cash offer. After all, home sellers often jump at cash offers because they know the buyer is financially solid and should be able to close quickly. But that doesn’t mean that non-cash buyers are automatically out of the running when competing with cash offers.

If you’re going up against a cash offer when trying to buy a home, you’ll have to find a way to make your offer more appealing than that of the all-cash buyer. Here are five strategies to try.

Prove That You’ve Got Your Finances in Order

If a home seller is even going to consider your offer, they need to know that it’s not going to fall through at the last minute, forcing them to put their home back on the market. You can help assuage the seller’s fears by presenting them with as much proof as possible that your finances are sound. Include a mortgage pre-approval letter with your offer, and tell the seller you can provide them with additional information about your income, savings, and credit score if necessary.

Move the Appraisal Process Along Quickly

Home sellers are often motivated to close quickly so that they can move into their new home. If they’re choosing between a cash and non-cash buyer, they may go with the non-cash buyer if she can close faster. Make yourself an attractive candidate by being ready to move forward with an appraisal and getting your loan approved quickly. It may be in your best interest to work with a smaller bank, direct lender, or mortgage broker who can schedule your appraisal in advance so that you can move forward as soon as you make your written offer to the seller.

Be Ready to Go with the Home Inspection

Just as you should be ready to move forward with your appraisal, you should also be able to get a home inspection done as quickly as possible. Although it might be tempting, you shouldn’t skip the inspection altogether—this is your one opportunity to uncover any hidden (and potentially costly) issues with the home. If your home inspection does uncover some minor issues, you may want to offer to buy the home “as is” rather than waiting on the seller to make repairs. To make their life easier, the seller may accept your offer over a cash offer with repair contingencies.

Determine If You Can Top the Cash Buyer’s Offer

All-cash buyers are usually real estate investors, which means they want to buy a property for as little as possible and probably won’t be inclined to get into a bidding war with another buyer. If you can pay just a little more than the cash buyer, the seller will be more likely to choose your offer. It may also be in your best interest to pay a little more now rather than waiting to buy when home values in your area have gone up. Just make sure you’re not getting into a situation where you’re paying more than you can afford—or far more than the property is worth.

Write a Personal Offer Letter

Try appealing to the home seller’s emotions by writing a letter that explains what you love about your house and what you plan to do with it. Some sellers may prefer the idea of their home going to a buyer who wants to raise their family in it, for example, rather than an investor who plans to rent or flip it. There’s no guarantee this approach will work, but it’s low-risk and can help your offer stand out.


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