Hey, Kyle here winthehouseyoulove.com.
Today we're talking about 11 ways you can beat out a cash offer on a home.
So first you're going to learn what the seller wants.
We need to figure out their motivation to be able to get that offer accepted.
And number two, we're going to talk through these 11 ways.
So let's go and dive into this.
If you're in a competitive sellers market, that means the sellers have the control,
most likely what's ending up happening is you're putting in offers on homes and
you're getting beat out by other offers.
So when multiple buyers are competing on one home, you're going to be seeing
more cash offers come in and these offers are normally a little bit more
attractive to a seller because they don't have to worry about financing because
financing sometimes falls through right buyers either can't qualify on their
loans, or an appraisal comes in short.
And that process is longer.
Normally on average, 30 days.
With cash, the process is only about two weeks to close cash on a home.
So sellers tend to gravitate towards cash because it's guaranteed
and it's going to close quick.
The problem here is cash is almost always synonymous with a lower offer.
If we have a home that's listed at $300,000, somebody who's submitting a cash
offer might submit an offer at $290,000.
And the reason why they put that cash discount on there is again,
because they know they can guarantee those funds are there and the
money is going to move quick.
Now on the opposite side, when you're using financings, so you're
using a mortgage, normally you're not going to be able to have as much
leverage to negotiate a lower price.
And the reason why is because you're offer's a little bit less attractive
because you're using financing.
Cash tends to be the most attractive, then financing second to that.
So we're automatically at a disadvantage with the seller, because if we're
up against a cash offer, that's guaranteed money that moves a lot
faster than us purchasing the home.
So we need to be able to stand out.
If the financing is pulling our contract down, we need to find some
other ways that we can show the seller that we have a really strong offer.
And we have to remember what the seller wants.
The seller ultimately wants to sell a home for a specific price.
What they're trying to do is pay off their mortgage if they have one and make
a whatever number is in their head for the profit on the sale of their home.
Okay.
Most of the time they want to move out of that quickly and they want to
get that specific number for the sale.
So we want to try to figure out how do we structure our offer
to be the most attractive?
A lot of times buyers want to figure out how they can like rip off a seller,
or how they can get a good deal.
But we have, if we want to win the offer, especially in
a competitive sellers market.
We have to be willing to play the game and figure out how we're going
to stand out amongst all the other offers, especially these cash offers.
So before we get into that, let's have a CalmMoment for a second.
Because if you're, if you're in that spot where you've put in multiple
offers on homes and you keep getting beat out by other people, because
the market's so competitive, I know how frustrating that is.
I've talked to so many buyers who are facing that right now, and it's
super stressful and discouraging.
And I just want you to know that it's okay to take a break.
All right.
So that break could be one week, it could be one month.
It could be a year you're allowed to take that break, take time to recover.
Sometimes it gets a little too easy to step into the home buying world and
to just have this flood of pressure and anxiety moving on top of you.
Because you see something that you like, and then it gets taken away, then you see
something you like and gets taken away.
And so it's an emotional rollercoaster.
Sometimes you need some, some time and space to recover from that.
So if you need to, if you're feeling overwhelmed, maybe just take a
week break from home shopping.
Okay.
Then come back and revisit that.
So let's talk about always to make a more attractive offer.
Number one is to get fully pre-approved.
So when you're talking with a lender, submit all of your documents, all
of the info, have their underwriter, take a full look at your file and
give you that approval upfront.
And then what you can do is ask your lender to call the seller, okay.
This is perfectly acceptable to do.
I've done this a few times in competitive, offers where, the agent will ask me to
call the seller and then I call them up and say, Hey, this is the buyer.
Just want you to know that we have all these documents in
here and here credit is good.
Everything is good to go.
Underwriting has cleared this there's going to be no issues with the loan.
And that makes the seller feel a lot more confident about that loan closing.
Also explore your type of loan options that you have.
A conventional loan is going to be the most attractive loan that you
can get followed by FHA, USDA, and VA all kind of tie in second place
for the most attractive financing.
Conventional loans tend to move a little bit faster and are a little bit, have
higher qualified buyers with higher credit scores on a conventional loan
compared to those government loans.
Also consider submitting an offer letter.
Sometimes people call this like a love letter to a seller, and
basically this is you showing some emotion in with that contract.
So that seller sees more than black and white paper.
They see that you are interested in the home because it's going
to do something for your family.
All right.
Also, you need to put forward your highest and best offer.
And so this is a term that realtors use a lot.
It's basically saying, Hey, if you want the house, you're going
to have to pay for the house.
Okay.
I know that everyone likes to get a discount, but in a seller's market,
especially competing against a cash offer, you need to put your best foot forward.
If you're willing to pay a little bit more for the home, put that in your offer now
is not the time to shortchange the seller.
Explore putting an appraisal clause in there.
Sellers are often afraid of a short appraisal because
the deal could fall apart.
All right.
So an appraisal clause basically says in your offer that if an appraisal
comes in short, you, as the buyer are willing to put up additional money
to meet up that short appraisal.
Okay.
Also look at changing the inspection contingency.
So normally in a contract there, a contingency that says you have
the right to do an inspection request to repairs, and you have
a certain time period to do that.
So something you could do is say we're willing to purchase the home and "as
is" conditioned so upfront you're saying, you know, we're either not
going to do inspection or if we do an inspection, we're not going to ask
for repairs, and explore, shortening that timeframe because an inspection
contingency can be up to 15 days.
It can be whatever you want.
Maybe explore, shortening that down to maybe three days to show the
seller that you want to move faster.
Also, you can reduce closing cost credits.
So.
Remember, it's how much the seller is getting net that they have in mind.
So if you have a $300,000 house that you're offering on and you ask for
$5,000 in closing cost credit, the seller is only getting $295,000.
Okay.
So if they were anticipating getting $300,000.
You took away $5,000 from their profit that they were expecting, meaning that
offer's going to be less attractive.
So maybe talk with your loan officer, if you have the ability
to remove closing cost credit from your contract or from your offer.
Also, you can put high earnest money down.
So an earnest money deposit, it's kinda like a good faith deposit showing the
seller that you know, you're putting some money backing that offer saying, Hey,
when we get under contract, we're going to go submit this into a third party
account, an escrow account so that you can see that we're serious about this.
And we have some skin in the game upfront.
You can also shorten the closing time.
All right.
So if you're already pre-approved with your lender, you might be able
to take your closing time down from 30 days to maybe 20 days or 15 days.
Talk with your lender about what these closing times look like.
But a shorter timeframe is always more attractive to a seller.
They want to get their money as soon as possible.
Most of the time, they don't want to extend that out too long.
And then finally you can have a pre-ordered appraisal in there as well.
So you could write in a clause or let the seller know that once
we're under contract, we're going to immediately order the appraisal.
So you can get that rolling.
And the benefit of this is you're speeding along the process and
showing the seller that you're serious about moving things forward.
Okay.
So hope this helps.
If you want to learn more about how to write an offer letter, this video over
here is can help you figure that out.