Why do sellers prefer cash offer? When deciding between multiple offers on a home, cash offers draw a certain allure. Buyers who are paying with cash can immediately verify they have the money available. This means that the closing process will go quickly and without any unexpected hiccups. Buyers who need their purchase financed through a mortgage lender can be a liability to sellers. A buyer’s loan can be denied for multiple reasons like home inspections and appraisals. Cash offers tend to close quickly and predictably and often without an appraisal or home inspection.
This can leave some buyers wondering how they could ever compete with a cash offer. Just because you aren’t able to offer up a briefcase of cash, doesn’t mean that achieving your goal home ownership is out of reach. But if you are going to go head to head with a cash offer, you are going to need to have an edge. Following are a few tips to help you compete with a cash offer.
Determining what is most important to your seller can be the key to closing on your dream home. Many buyers assume that a seller wants the most aggressive, quick close for the highest price. Which isn’t always the case. Different sellers value different things. Some want the highest price they can get. While others want to close in time to purchase another home. And some just want to find a good caretaker for their home. While a cash offer comes with a definite allure, sometimes those offers ignore the most important factors for the seller. If you can match the seller’s criteria, you will be a strong candidate.
If you want to make your offer as strong as possible, you should consider if there are any contingencies that you are willing to forgo. If you are willing to waive a home inspection or a secondary appraisal, you may have a leg up on buyers who won’t. Sellers are drawn to the least amount of restrictions as possible. Just keep in mind that this comes with a certain risk. Anything potentially wrong with the house will be your responsibility to fix.
When purchasing a home, you will be judged by the company you keep. So you want to make sure you make a good impression. Having a strong loan officer to represent you can speak volumes. Sellers love cash because it means there won’t be any last minute snags if the buyer can’t get a mortgage. Prove you are a serious contender by including a mortgage pre-approval letter from a strict lender. You can even boost your reputation by getting several pre-approval letters and including them with the offer.
Since it is a challenge to compete with an all-cash buyer, you need to come out with your strongest offer possible. The more money you can put into your down payment, the less money you are borrowing from the bank. To the seller, this means a lower chance that your financing will fall through. Be prepared to come in at or above the asking price.
Writing a personal letter can really give you an edge up on a cash buyer. Especially if that buyer is a house flipper. If the seller has lived there for awhile, they are likely to have an emotional attachment to the property. Tell them why you love their home, and give them a little background about yourself. Explain why you should be the one lucky enough to get their home. Putting a face to a name and a story to a face can be a valuable way to secure the home that you want.
Make it clear that you are willing and able to operate in the seller’s schedule. If possible, figure out their timeline for moving and even their reason for moving. If a seller has all the time in the world, they are likely going lean toward an offer with contingencies and a higher price. But some sellers might be under a tight schedule due to the start of school or a divorce. In these cases, the seller could be likely to take a lower offer with no contingencies just to fit their time frame. So stay flexible and be willing to work with the seller for your dream home