How Can I Compete When I’m Financing the Deal and Don’t Have Lots of Cash?

Sep 20, 2018Home Financing, Homebuying Process, Real Estate Tips, Uncategorized

Nothing talks quite like money in real estate. The ability to put down an all-cash offer on a home immediately puts you ahead of those offers who are relying on financing. Why? Because it cuts out the time and hassle of the mortgage approval process. For those who need financing for a purchase, this can present a real problem. Competing with all-cash buyers isn’t impossible – just difficult. To give you the best chance of snatching up your dream home, here are some strategies to help you compete against all-cash buyers.

Figure out what’s important to the seller

If you know what the seller wants you can get a leg up over other interested buyers, even those offering all-cash. Some want the highest price they can get. Others want to close in time to buy another home and get the kids enrolled in school. Some are just looking for a good caretaker to pass their home onto. A large offer or a quick closing isn’t always what a seller wants. Find out what they want and see if you can match that criteria. It might be a promise to close by a certain day or choosing to waive certain contingencies in the contract.

Offer more money

Many all-cash buyers make an offer that’s lower than the asking price. They reason that the chance of a quick and sure sale will trump the seller’s desire for more money. This might work but if the seller is committed to getting the price they want they may go with a larger offer, even if it’s coming from a buyer that’s financing. So, if it’s possible, try to offer as much money as you can. Of course, no one wants to overpay for a home, but if you’re competing with all cash buyers you might have to.

Go beyond preapproval

It’s well understood that submitting a mortgage pre-approval letter with your offer is better than prequalification. It shows you’re a serious buyer and gives the seller confidence that your financing will come through. But you can take this a step further by getting an underwriter’s review of your loan application prior to making your offer. The underwriter will review all your income, assets, and credit documents.

If everything checks out, they will underwrite it and give you a loan commitment letter, pending appraisal, to include with your offer. This is far more assuring to a seller as you now have a full commitment from your lender. Just remember to check with your lender first to insure that this is an option.

Inspect in advance

Most all-cash offers on a home come with a contingency on a home inspection. That way, if anything wrong is found, they can back out. Sellers don’t usually like this, especially if they know there are a few problems that might come up. A buyer that’s financing can get around this by asking to do a home inspection prior to making an offer. If the seller agrees and the inspections come back ok, then you can submit an offer without an inspection contingency. That you’re willing to take the time for this shows how serious your offer is and puts any doubts in the seller’s mind to rest.

Write a letter

You may have heard of this one. Writing a “love letter” explaining what you love about the apartment and why you want it. Don’t underestimate how effective this can be. When you put a human face on your offer you become more than just a dollar sign. If the sellers are facing a bunch of investors who plan to flip the house, then a heartfelt letter from a new family that promises to care for the home could be enough to tip them in your favor.


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