2015-03-17
You Can Compete With Cash
You Can Compete (and Maybe Win) vs. an All-Cash Offer

Depending on location and market dynamics, cash buyers (those not requiring a mortgage) currently account for a third of all home purchases, according to CoreLogic, a firm that tracks real-estate trends.

As a buyer who needs a mortgage to purchase a home, it will be tough for you to compete against an all-cash offer, particularly in a market where multiple offers abound. From a seller's perspective, an all-cash offer eliminates both hassle and risk, as do offers without appraisal or financial conditions, which, in a hot real estate market, can also reduce your chances of success. There are, however, some ways to make your offer more competitive. For example:

  • Try to avoid multiple-offer situations
  • Ask your agent to help you find off-market properties
  • Consider waiving the financing contingency clause, which allows you to cancel the contract if you don't receive loan approval, or if an appraisal comes in below expected value
  • Increase your down payment
According to a recent article in the Wall Street Journal, securing a pre-underwriting letter may make your offer more attractive. Unlike a pre-approval letter, this one has teeth. It contains deep income and asset documentation, which sellers like to see, as it means you are a serious buyer, plus it may move you through the approval process more quickly.

Many cash buyers are overly confident and therefore submit unrealistic, low-ball offers. So, while cash is worth a 2 percent to 3 percent discount, sellers annoyed by the low bid might just accept yours instead. 
 
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