If you’ve been searching for a new home to purchase, you probably already know how intense and competitive the process for submitting an offer on a property can be.
With so many buyers creating bidding wars to outshine previous applicants, buyers must prepare to stand out from the crowd. Particularly, one of the most challenging offers to bid against is an all-cash offer.
When applicants begin offering cash for properties, this capital almost always gives them the upper hand against any other prospective homebuyers. However, cash offers aren’t necessarily a done deal. If you submit an offer for your dream home only to find out another bidder has offered cash, this doesn’t mean your chances are entirely lost.
In this blog, we’re sharing five strategies to try when competing with an all-cash offer. These strategies will help future homeowners be prepared for these compelling bids so that they can still secure their dream homes.
Offer More Than the Asking Price
One of the best ways to outshine an all-cash offer as a bidder is to offer an amount above the seller’s asking price. Although offering more than the selling price and be intimidating for most homebuyers, even a small increase in price can make an enormous difference.
Most commonly, when bidders offer sellers all-cash offers, these offers are typically lower than the original selling price of the property. The lower price on all-cash offer bids is often seen as fair, considering cash transactions waive several fees and make the transaction process smoother for sellers.
However, potential buyers who don’t have large amounts of cash lying around can get sellers’ attention by offering a higher bid that overpowers the convenience of cash offers.
When you can’t offer more than the seller’s asking price, consider outshining other bidders by waiving all your contingencies. Not only is waiving your contingencies convenient for sellers, but this offer also shows sellers that your bid is highly serious.
However, waiving your financing, inspection, and appraisal contingencies is also an incredibly risky move for homebuyers. These contingencies exist to ensure that buyers can back out of bad property deals when financing, inspections, and appraisals fail.
Before waiving contingencies during a bidding war, contemplate whether the risk of jumping over these quality assurances is worth outbidding an all-cash offer. Also, consider consulting with your realtor to assess whether waiving a property’s contingencies is wise.
Secure a Mortgage Pre-Approval
Other than convenience, one of the best things a prospective buyer can offer to compete against cash bids is confidence. Most property sellers are simply searching for a buyer than will meet their asking price and not back out of their offer.
Unfortunately, when buyers submit bids on a property and sellers see that these bids do not have pre-approved mortgage loans, these offers are more likely to be disregarded.
If a seller accepted a buyer’s bid and the buyer’s mortgage loan ultimately failed approval, several urgent issues would follow. Sellers prefer to avoid this worst-case scenario at all costs and therefore tend to overlook bids without pre-approvals.
Competing against all-cash offers can be challenging, but investing time to showcase solid financing with a pre-approved mortgage loan will give sellers the confidence to pick your request over cash offers.
Write a Personal Interest Letter
When you find your dream home and you’re caught in a cash bidding war, it can be frustrating to watch numbers and figures cloud your passion for a property. One of the best strategies to try when competing with an all-cash offer is to reach out personally to home sellers.
Writing a note or letter of interest to the property seller can have major advantages that ultimately outweigh cash offers. For example, if a prospective buyer writes a letter of interest to a property seller explaining that their family fell in love with their property, sellers may be more enticed by these sentiments compared to higher bids.
For sellers who prefer to prevent their property from being torn down or flipped, reading these letters of interest can be much more influential than a cash offer. If you’re passionate about a property, use this sentiment to your advantage. Write a letter of interest so that you can outshine any all-cash offers.
Work With Your Real Estate Agent
Although all-cash offers can be highly intimidating for home buyers, these offers are far less scary to seasoned real estate agents. When you work with a talented real estate agent and brokerage, these professionals can research and strategize tactics to help ensure that sellers consider your offer.
Your real estate agent will negotiate prices and learn what incentive the seller specifically is searching for in a sale. You’re far more likely to outbid cash offers and land a mutually beneficial transaction deal with this additional information and expertise.
We hope some of these key strategies can help you stay prepared for any cash offers or bidding wars. Although it’s a challenge to compete against all-cash offers, it’s critical to have limits for your spending. Losing a bidding war on your dream house can be devastating, but getting lost in a bidding war and overlooking your capacity for financing is also a disaster.
For the best results, work with an experienced realtor. These professionals help you navigate how to secure a property without overbidding. Having this extra help will ensure that buyers can invest in the home of their dreams without experiencing post buyer’s remorse.
Are you looking for a real estate brokerage to get started? Here at LoKation Real Estate, we offer endless resources, training, and support to our real estate agents to make sure they can meet all their clients’ needs.
Our real estate brokerage has some of the most successful and seasoned realtors in the state of Florida. So, whether you’re a home buyer searching for an agent, or you’re a new agent looking for a brokerage to represent home buyers, we’re got you covered.
To learn more, check out our 100 percent commission real estate brokerage in Tampa, Florida, for additional information.