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Scott Petersen

You Can Compete (and Maybe Win) vs. an All-Cash Offer.

I have no idea where all of the cash is coming from, maybe it's the unpredictable stock market or illicit gains from an underground economy, but cash buyers (those not requiring a mortgage) currently account for a third of all home purchases.

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, I have some ways to make your offer more competitive. For example:

Try to avoid multiple-offer situations. Easier said than done, but competing against multiple offers will be the surest way to lose to an all cash offer.


Consider waiving the financing contingency clause. This is risky, but leaving out this contingency that allows you to cancel the contract if you don't receive loan approval, or if an appraisal comes in below expected value will bring your offer more to par with a cash offer.

Increase your down payment. This is an easy tactic to show yourself as a very strong buyer to the Seller.


Come with an Underwriting Approval, not just a pre-approval. Not all lenders will provide this, but those that do all you to secure a pre-underwriting letter which 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.

Be prepared to offer a little more than a cash offer! 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 can be annoyed by the low bid cash offer and just might accept yours instead.  
Published Thursday, May 12, 2016 2:03 PM by Scott Petersen

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