In a strong real estate market, the fear of having to compete with all-cash buyers might deter some potential homeowners from making an offer on their dream house. While all-cash offers are appealing, it isn’t the only factor that sellers consider when accepting an offer. REX’s Director of Home Lending, Doug Sheridan, and REX’s Managing Broker Steve Dawson have provided some tips to help you compete with all-cash offers!
Get pre-approved from a qualified mortgage broker
Having your loan pre-approved will give you the strength and confidence in this market that you can close quickly. Be sure it is more than just a templated letter and actually underwriter reviewed and validated. Mortgage brokers have an advantage of selecting multiple investors to ensure the most competitive terms and can usually close quicker than big banks.
Fewer contingencies, the better
It’s not always about price, it’s about showing the seller your confidence in closing the escrow. Improve your contingencies by shortening them to a very small window or remove them altogether. If you feel comfortable removing either the inspection or appraisal contingencies, that will help you compete with an all cash buyer.
Understand what the seller wants
Ask about what is important to the seller. Don’t assume that price is their motivating factor. Maybe a longer close of escrow is important, or the seller having a contingent offer on a replacement property is necessary. Find out what drives and motivates the seller and cater your offer around that. If you can present an offer that is tailored to what the seller wants, your offer becomes more appealing.
Personalize your offer
Selling a home can not only be the biggest financial transaction of someone’s life, but it can also be one of the most emotional. While getting top dollar is great, some seller’s are just as interested in knowing their home is going to be taken care of after they’ve left. Sending in a personal letter with your offer can sometimes go a long way to making your offer stand out, even if it’s going up against an all-cash offer.
Make your best offer first
Don’t mess around! If you love a house, are serious about buying it, and know there are other buyers interested, don’t waste time trying to negotiate. Be up front with the seller and give them your best offer right off the bat. This helps show the seller you are serious and are ready to get the deal done.
Just because you love a home and just because you are competing against all-cash, doesn’t mean you should overextend yourself and offer more than you can afford. Do your research before making an offer and understand that you shouldn’t go above your means.