In markets where all-cash offers are common, it can be easy for buyers to become discouraged early on in their home purchase process. After all, how is an everyday buyer supposed to compete with a cash offer on a home? Most of us don’t have several hundred thousand dollars lying around that we can use to buy a house, after all.
Make sure you’re pre-approved
It’s a bigger process requiring more documentation and due diligence to secure pre-approval than to get a pre-qualification, but in a market where you’re competing with all-cash offers, a pre-approval is an absolute necessity — so don’t skip it!
Consider underwriter loan review
A big step in the home mortgage process is underwriting when an underwriter employed by the lender takes a fine-toothed comb to all your financial information and documentation to make sure everything is accurate and above-board. And you can get a loan review of your pre-qualification from an underwriter before you make an offer, which can help alleviate the seller’s potential fears that the loan might not manifest for you.
Offer more than asking price
Sellers might still be inclined to take a cash offer because they close more quickly and involve fewer hoops to jump through, but you can make your own offer look extra enticing by offering more than the seller’s asking price. From a seller’s perspective, it might be better to wait a little bit longer to close and net more money instead of closing sooner for less money, so it’s worth a shot to write an offer that’s above asking price if you can.
Beef up your down payment
Submit your best offer upfront
Don’t waste the seller’s time — or yours — by submitting a lowball offer first and hoping they’ll counter, because if it comes down to your lowball (financed) offer or an all-cash buyer’s lowball offer, the seller is going to go with the all-cash buyer every time. Instead, put your best foot forward by submitting an offer at the top of your budget, which might just do the trick for you.
Fork over more earnest money
If you can, write a big dollar amount of earnest money into your offer — including some or all of your down payment, if possible — to show the seller that you really are serious about taking this sale to the finish line. Most sellers are going to be swayed by getting a portion of their home’s sales value upfront instead of having to wait until closing, so this can make you a serious contender against an all-cash buyer.
Meet the seller on their terms
Ask your agent to do some legwork and figure out what the seller wants (apart from price) that might help your offer stand out, then write those factors into the offer when you submit it.
Submit a pristine offer
Expedite the appraisal and inspection
Write the seller a letter
If you don’t have a family, don’t despair; there are plenty of other ways you can show some personality through a letter to the seller. Do you work in a community service-type job, such as a teacher or a police officer? Were you enlisted in the military at any point in your life? Are you a general contractor who can promise to keep the house in peak condition? Do you have any experience or certifications working with historic properties that might help the seller feel like they’re leaving the home in good hands? Use your imagination and paint yourself in the best possible light in your seller letter; you might be surprised how far it can get you.
Waive negotiations over repairs
This will mean that you’re on the hook for those repairs, of course … but that’s not necessarily a bad thing! A departing homeowner might be tempted to cut corners and opt for the cheapest possible repair, but if you’re tackling it, you can make sure the repair is done to the highest standards.
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