In a hot real estate market, it might seem impossible to beat cold hard cash, but it’s not. With a few tips and tricks you can make a competitive offer, without liquidating all your assets.
Jennifer Branchini of Better Homes and Gardens Real Estate in Pleasanton, California, knows the allure of all-cash for sellers, but serious buyers with traditional financing should not count themselves out. “One or two less things could go wrong in a [cash] transaction but [those buyers] can walk away just as easily as somebody that is getting a loan,” she says. Smart sellers know that and will look at the full picture.
Still, even with 1 in 3 homes being snapped up by all-cash buyers sellers still have skin in the game if they concentrate on knocking every other obstacle out of the way.
“Find out what the seller needs and then try to meet those needs,” Branchini advises. Here’s how.
Go in strong
Go ahead and get pre-approved for a loan – prequalifying just won’t cut it. And while you’re at it, go ahead and get an online appraisal for the house and have an inspection all lined up too when you make the offer.
“Less can go wrong because they’ve had the formal approval based on the house. And lenders are getting smarter and meeting the needs to compete with cash offers,” Branchini says.
Sometimes the all-cash offers are not the highest or best, so going in with more than the bare minimum down payment along with your financing will still show the buyer you are a serious contender. And forget lowballing. “You have to go in with your very best foot forward, put all your cash up front and then hope for the best,” Branchini says.
Lose the contingencies
Want to compete with cash? Sell your home now so when you make an offer it isn’t contingent on the sale. “That’s like the death sentence,” Branchini says.
And while all-cash buyers offer the benefit of closing within days, that isn’t very appealing to sellers in a hot market. Many of them are going to be in the same predicament of finding their next home now that their current one has sold. Being flexible the seller’s needs can boost your chances of success.
“I’ve got to keep these people in the house to go find another house,” Branchini says. “They need rent backs, they need to stay for a longer period time. So a 30-day close is actually not a terrible thing.”
Sometimes all it takes to stand out is to make your offer personal – without imposing or veering into stalker territory. Branchini recently had a client who knew they were up against multiple offers, some cash, but were desperate to make the home theirs. Knowing a bit about the sellers they left a personal note on their front porch that included a bottle of wine and a toy for their dog.
And it was just the thing that put them over the top and got them the house.
“As long as you don’t knock on the door and disturb the owner I think it is a nice touch,” Branchini says.
Of course you don’t have to go as far as that – a simple note delivered with some flowers will set a nice tone without potentially putting you in personal contact.
The total package
Sometimes it’s all in the presentation and it’s hard to discount an offer so complete.
“My package has a cover letter, a letter from the buyer, the pre-approval letter, proof of funds to close a transaction, it has the offer and then if they’ve asked for disclosures it has that as well,” Branchini says. “Everything they possibly could need to make a decision is in one PDF.”
She strongly encourages buyers to write that personal letter to the seller. “You’ve got to touch both sides,” she says.” You’ve got to touch the warm, fuzzy seller and you’ve got to touch the financial seller.”