Compete in All-Cash Markets

What Real (Not-Rich) Buyers Can Do to Compete in All-Cash Markets

More than ever, we hear about homes being snatched up by “all cash” offers, and it’s natural to wonder how you’re ever going to compete without your own briefcase full of dollars. But you should know that your goal of homeownership isn’t impossible. If you want to battle with those all-cash buyers who seem to be taking over the market, you’re going to need to find a smart edge.

Why do Sellers Prefer Cash Offers?

For sellers deciding between multiple offers on a home, cash offers have a definite allure. Buyers who are paying with cash—as opposed to having their purchases financed with a mortgage lender—can immediately verify they have the money available to close on the transaction, meaning the closing process will go quickly and without any unexpected hiccups.

On the other hand, buyers who need a mortgage to finance their home purchase are a liability to sellers. Even with a pre-approval letter in hand, banks and lenders can still deny a buyer’s loan for multiple reasons during the closing process, like if the home is appraised for less than the purchase price, or if the home inspection uncovers a huge problem with the property. In that case, the contracted sale will fall through and the sellers will have to go back to the drawing board, wasting time and money in the process to find another buyer. Cash offers tend to close quickly and predictably, sometimes even without an appraisal or home inspection.

Know The Truth About Competing “Cash” Offers

The term “all cash” is thrown around constantly in real estate, but it can be deceiving. Nobody is buying homes with garbage bags filled with cash. “Often time, developers, investors, etc. will say ‘all cash,’ but there is a very good chance that they’re borrowing private or ‘hard’ money.  It might not always make a difference to the seller, but you can put in a little legwork and find out the facts about who you’re competing with. Your agent will be more than happy to help out.

Show Them the Money (As Much as You Can)

Since it’s challenging to compete with all-cash buyers, you need to come out with your strongest offer possible. The more money you can put into your down payment, the less money you’re borrowing from the bank. This means a lower chance that your financing will fall through. Let’s face it, at the end of the day, most sellers want the most money possible with the smallest risk. Be prepared to come in at or above the asking price.

Work With a Local, Reputable Lender

Buying a home is one of those situations where you will be judged by the company you keep. Having a strong loan officer to represent you can speak volumes. Great lenders are also strict lenders, and having a pre-approval letter signed by them may be as valuable as cash. My favorite loan officers will pick up the phone and call list agents when they learn our clients are in competitive situations: they highlight their qualification and extend their contact for any questions that should come up while reviewing their offer.

Have a Personal Edge

They may have cash, but you can have heart. Write a personal letter to the seller, and explain why you should be the one lucky enough to get this house. If they’ve lived there a while, they probably have a real emotional attachment to the property. Tell them why you love their home, and give them a little background about yourself. Thank them for giving you the opportunity to submit an offer and taking the time to review it.

Bring the Receipts

Make it clear to the seller that even though you aren’t able to pay in cash, you’re still a highly trustworthy individual with a stable financial background. Have your financial advisor vouch for you. Show them a letter from your financial advisor about how over-qualified you are to get the mortgage you are seeking. Offer a call with your lender about how overqualified you are to get the loan.This might help to sway a seller your way versus a cash offer, or ease their concerns about accepting your financing contingency.

Stay Flexible

Make it clear that you can operate on the seller’s schedule. If you can, find out how they’re timing their move, and even their reason for moving. Some sellers might be under a tight schedule due to the start of school or a divorce agreement. Others could care less, and just don’t want to be rushed. If the seller feels like they have all the time in the world to sell, they might be more willing to take a contingency and a higher price, because they could always just go back to the market if the deal falls apart due to financing. If they need to sell within a certain rushed time frame, they would likely take even less for the property to get a cash, non contingent offer.

Never Waive Goodbye

Never consider waiving your inspection contingency, to strengthen your offer. (The inspection contingency gives buyers an out from an agreed-upon offer contract if the home doesn’t pass inspection.) Sellers are drawn to the least amount of restrictions possible, and as a buyer, this may give you a leg up, but it is extremely risky. Anything potentially wrong with the house will be your responsibility to fix, as the buyer. If you are considering waiving the inspection, you may consider bringing in a home inspector before even putting down an offer on a home. This will cost money, but nothing will beat a professional’s ability to spot problems.

Consider buying new construction!

Your next home should be a truly new home. Learn why new homes are better.  Spend your money on whats important, instead of repairs and remodels! Remodels can cost tens of thousands $$$$$ Repairs for major appliances like water heaters and furnaces can cost thousands $$$$. When these are brand new, they are covered by a warranty. New Homes Offer Money Saving Benefits. Lower Home Owners Insurance Costs, Lower Annual Maintenance Costs, Lower Upkeep Costs, Higher Resale Value, 10 Year Warranties.

Call me to discuss your New Construction needs and let me show you how to save up to 10% on the purchase and finance of your new home! 970-217-3245

I have a lot of connections within the Northern Colorado area. Please don’t hesitate to call and ask me any questions you might have. This process is all about you and your needs. Real Estate is a big investment and I understand that. One thing you will get with me is a personal relationship, In the end, that goes a long way.

Northern Colorado is a great place to live! For more information, please give me a ring or email me today. I would love the opportunity to earn your business and partner with you in regards to your Real Estate needs.

If you are looking to purchase, I can show you how to save a lot of money, as much as 10% on the purchase and finance of your next home.

Contact me today to learn about ALL of my strategies to get you the BEST price for your home in the SHORTEST possible time, with the least amount of Brain Damage!

Paul Ross  970-217-3245

RESIDENT REALTY

SOURCE:

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