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Crush the ALL-CASH Offers in a Hot Sellers Market


Crush Cash Offers

Cash is being used on half of all home purchases

There is a HUGE reason someone offering to buy a home with cash is attractive to a seller: The hassle that comes with selling a home — dealing with the buyer’s financing — is eliminated.

If you’re trying to buy a home, there’s a good chance you’ll competing with multiple offers, and some of them all cash. In January, 44.4% of U.S. home buyers paid in cash, according to RealtyTrac, a California-based firm that tracks real estate trends.

These are financial institutions scooping up investment properties to rent out or foreign buyers, most likely Canadian. International buyers account for about 6% of home sales, but more than half pay cash, in part because they can’t get mortgages.

Still other all-cash buyers are people who have accumulated equity or savings. The proceeds from a home sale combined with savings can be enough to pay cash for that next property.

If you’re relying on a mortgage to buy a home, use these TIPS to get your purchase offer accepted over an all-cash buyer’s offer.

1. Start With Your Best Offer

In this sellers' market we are in, offers are coming in fast and hard. Buyer's who try to low ball the home to "steal" a home will be left holding an empty bag.

A lot of cash buyers think because they are offering cash, they hold the upper hand and are offering a lower amount, or more unfavorable terms.

Start off with what you are willing to pay for the home, and make the offer as attractive as possible. We are not in a buyers market where buyers make the rules.

Plan ahead on not asking the seller to fix or correct minor items, and only ask for repairs if they are structural, safty issues, or repaires required by the appraiser.

2. Pre Approval is the Start, DON't Stop There

Pre-Approval used to be the GOLD STAR of of I am ready to buy a home. Now you really have to go well beyond that to stand out and compeate with Cash offers.

Start with turning in all your documentation, and having your loan submitted and reveiwed by underwriting to gain a Credit Approval. This makes your Pre-Approval much stronger, and it lets you know upfront if there are any concerns with your documenation.

Always, always, always, have your mortgage loan officer call the listing agent to let them know that you are well qualified, and that they have reviewed all your loan documentation. Pay Stubs, Credit, Tax Returns... everything. And that you are a very well qualified buyer.

Building report with the listing agent will give you a slight edge, and often, that is all that is need. Get Pre-Approved

3. Increase your DOWN PAYMENT

Increasing your down payemnt is often a way to settle a sellers nerves. If you are able to put down 30% or 35%, put that in the offer. It lets the seller and listing agent know that even if the home does not appraise for the salese price, your loan to value should still be fine. Write up the offer with max down payemnt you are comfortable with.

4. Inspect in Advance if Possible

This is one of the more unconventional tactics. If you know a seller will accept and review offers the next 3 or 4 days before deciding. Ask the agent/seller if you may do your inspection during that time frame.

This will allow you to write an offer without an option period for the inspection.

Make sure during this time you have your insurance agent run the numbers on what the insurance premium will be, and have them run a report checking on previous claims. This is called a CLUE report.

5. Address Concerns the Seller may Have

The Seller wants to sell the home, and do so as smoothly as possible. They have most likely relayed what a perfect sale would look like to them.

Do then need to close fast, under 21 days? There are lenders that can do that.

Do they need to retain the home for a while after closing. The is a Seller's Temporary Residential Lease back form you can use. Depending on lender, this time frame can be from 30 to 60 days max.

6. Give the Seller all their Terms, within Reason

There are so many small items that can derail an offer being accepted. Don't sweat the small stuff. Give the seller:

  • Earnest money: At a minimum, offer what they are asking.

  • Title company: Let them choose.

  • Inclusions: Let them decide which fixtures, furnishings or personal property they want to take.

  • Inspections: Limit how much you will ask sellers to fix if the inspection reveals problems.

  • Closing date: Give them the date they want.

  • Possession date: Ask them if they want a day or two to move out after closing.

Finally, assuming you’re submitting your best offer, ask the seller, "What else can I do to make this offer better for you, other than a higher price?"

The Market is Tough out there right now if your are buying a home, but follow these tips, and you will have the highest probability of having your offer accepted.

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