Competing with all cash buyers isn’t impossible, it’s just difficult.
Some sellers will take the major money every single time and there’s nothing you can do about it. But, if you go in with a strategy, you might just have a shot. Here is how to create one.
Figure out the seller’s goals
Determining what’s most important to your seller can be key to getting your dream home – even when you’re competing against an all-cash buyer. People often think that all sellers want the most aggressive, quick close, for the highest price. That’s not always the case. Even if the price could be slightly lower but comes with a certain offer, sellers could want to take that over all cash. Understanding what the seller needs is always the most important thing.
Consider your contingencies
If you’re willing to forgo a home inspection or secondary appraisal, you may have a leg up over buyers who won’t. If you’re going to compete with a cash buyer, the contingencies may be a concern for the seller. If the prospective buyer is willing to eliminate the contingencies, that may be an incentive for a seller, especially if there are some issues with the property. This isn’t necessarily the best strategy. Without a home inspection, the property could have crippling issues that might have precluded you from purchasing, had you known. But if you’re dead set on this exact house and you’re pitted head to head against a cash buyer, it might be an option to consider. Of course, there’s one contingency you can’t remove – the mortgage!
Get pre-approved
You can help soften your mortgage contingency be getting pre-approved and offering a strong pre-qualification letter from your lender. If you’ve saved up a significant down payment and have excellent credit, this might be your winning strategy. The seller or their agent should understand there really isn’t a chance the loan will not go forward. With great financials and a large down payment, your mortgage officer can go to bat for you with the sellers, promising nothing serious will happen in the delicate time between offer and closure to compromise their money. Make your offer as cashlike as possible. The number one reason transactions fall through is because the loan gets declined during escrow.
Make sure your mortgage broker is great
How can you make sure that your broker is worth it? Do some research online beforehand, keeping an eye out for any negative reviews indicating mortgages that fell through at the last minute. You’re looking for someone who is thorough. After all, sellers often go with all-cash because they don’t want to get in any hassles during the loan process.
Make it personal
If you’re competing against all-cash buyers, you already have a leg up – most buyers don’t want to see the home they’ve loved and lived in destroyed or turned into another cookie cutter development. It’s an emotional reason, but people are more inclined to give to people who use it as their primary residence. They’ve lived in this home for all these years and want future homeowners to have similar kinds of memories. Try including a letter telling the sellers about yourselves and your hopes and dreams for their property. Putting a face to a name and the story to a face can be a valuable way to secure the home you want.
