Can you Make a Competitive Offer with All-Cash Offers on the Table?

Cash is king, but kings don’t always win when it comes to multiple offers on a property. It’s a seller’s market out there and all-cash offers are at an all-time high. Just because you cannot pay cash for your home doesn’t mean you will lose out to someone that can.

Knowing you are or may be competing against an all-cash offer may have you scared you’re going to lose the home. However, a solid offer with 20% down could be all you really need to compete.

Competing with a Mortgage

Even though you cannot make an all-cash offer, you can still compete. If you have 20% down, you’re well employed, you have cash reserves past your down payment, your debt is low and you have good credit, you still have a chance.

When all of these factors or even most are present, you’re just about as strong as an all-cash buyer. Here are a few ways you can compete with all-cash offers on your dream property.

Have your Lender Start the Mortgage Process Early

Getting pre-approved is a no-brainer, but competing with an all-cash offer may require more. Getting your lender to start the process sooner, rather than later is a good start. You can send the lender a preliminary title report, condo questionnaire and any other documents they need. Get them the financial documents they require immediately and make the process as easy as possible.

Pre-order the Appraisal

With some smaller lenders, you can pre-order the appraisal to ensure it’s done sooner. When you write the offer, you can order the appraisal and tell the seller you’ve already done this. Getting an appraiser to the property within 48 hours of your offer is a huge deal and shows how committed you are to buying.

Get the Home Inspection Done Fast

The sooner you can get the home inspection done, the better. This is another roadblock you will run into, but if you have a home inspector ready to come to the property as soon as you make an offer, it can show how serious you are about buying.

Be Upfront with Sellers

If you want your offer to be competitive, tell the seller exactly where you stand financially. Don’t just submit a pre-approval letter, but also let them know you’re ready to provide financial information to help the process move along faster. You can also let them know how much you plan to put down and what you have in the bank, along with your credit report.

While this may seem like over-sharing, it helps to give sellers confidence in your ability to buy. No seller wants to get through most of the process only to find out the buyer cannot get the mortgage they were supposed to be able to get.

Overpay for the Home

Sometimes, when competing against all-cash offers, the best thing you can do is overpay a bit. Many cash buyers want a discount for paying cash, so if you pay listing price or a bit more, your offer may become the most attractive one received.

The offer has to be more than just a few thousand dollars, however. It has to be worth it for the seller to take a risk of someone with a lender compared to someone with cash.

Write the Seller “Love Letters”

The seller may be willing to work with you over an all-cash buyer if they know you better. Maybe the all-cash buyer plans to flip the property for a profit or rent it out. For you, it could be the home you live in for the next 30 years. It could be where you raise children.

Write the seller a letter or a few letters showing them who you are and what you plan to do with the property. This can be done with your offer in the form of a cover letter, too.

Keep Contingencies to a Minimum

Contingencies slow down the buying process. If you can keep these to a minimum and make those you need such as an appraisal and home inspection happen faster, your offer becomes more appealing. With the right plan in place, you can be fully approved for the mortgage in two weeks or less.

Competing with all-cash buyers can be scary, but you have to be able to or you may lose your dream home. Make sure you’re prepared and have everything ready to go or you could be behind the eight-ball going into the process. Cash buyers can move quickly, so you have to move as quickly as possible by using the tips above.