Yes You Can Compete With Al LCash Buyers Heres How

Dated: October 1 2015

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Yes, You Can Compete With All-Cash Buyers—Here’s How

To some of us, all-cash buyers are the scourge of the superhot housing market: They swoop in, supervillain-like, and snatch up the most beloved and valuable properties from under our noses. Or at least the ones youmighthave loved, had you not been stuck with that pesky mortgage contingency.

Competing with cash buyersisn’t impossible, just difficult.

Sure, some sellerswill take the major moolahevery single time and there’s nothing you can do about it. But if you go in with a strategy, you might just have a shot. Here’s how to create one.

Figure out the seller’s goals

Determining what’s most important to your seller can bekey to gettingyour dream home—even when you’re competing against an all-cash buyer.

“People often think that all sellers want the most aggressive, quick close, for the highest price. That’s not always the case,” saysShashank Shekhar, founder and CEO ofArcus LendinginSan Jose, CA. When he soldhis home earlier this year, the most important factor was getting back two months’ freerent, because he was also trying to buy.

“Even if the price was slightly lower but came with that offer, we would have taken that over all-cash,” Shekhar says. “Understanding what the seller needs is always the most important thing.”

Consider your contingencies

If you’re willing to forgo a home inspection or secondary appraisal, you may have a leg up over buyers who won’t.

 “If you’re going to compete with a cash buyer, the contingencies may be a concern for a seller,” saysJoe Petrowsky, a mortgage broker inManchester, CT. “If the prospective buyer is willing to eliminate the contingencies, that may be an incentive for a seller, especially if there are some issues with the property.”

This isn’t necessarily thebeststrategy. Without a home inspection, for instance, the property could have crippling issues that might have precluded you from purchasing, had you known. But if you’re dead-set on this exact house and you’re pitted head to head against a cash buyer, it might be an option to consider.

Of course, there’s one contingency you can’t remove: the mortgage. (Hey, if you could,you wouldn’t bereading this right now!)

Get pre-approved…

You can helpsoften your mortgage contingencyby getting pre-approved—and offering a strong pre-qualification letter from your lender.If you’ve saved upa significant down payment and have excellent credit, thismight be your winning strategy.

“The seller or their agent should understand there really isn’t a chance the loan will not go forward,” says Petrowsky.Withgreat financials and a large down payment, your mortgage officer can go to bat for you with the sellers, promising nothing serious will happen in the delicatetime between offer and closure to compromise their money.

“Make your offer as cashlike as possible,” Shekhar says. “The No. 1reason transactions fall through is because the loan gets declined during escrow.”

… but make sure your mortgage broker is great

“I see pre-qualifications all the time that are not worth the paper they’re written on, because the brokerdoesn’t know—or hasn’t done—the due diligence on the prospective buyer,” Petrowsky says.

How can you make sure your broker is worth his salt? Both Petrowsky and Shekhar recommend researching online beforehand, keeping an eye out for any negative reviews indicating mortgages that fell through at the last minute.

You’re looking for someone who’s thorough: “We do a lot of due diligence to make damn sure that person isgoing to get a loan,”says Petrowsky.

After all, sellers often go with all-cash “because they don’t want to get in any hassles during the loan process,” says Shekhar. “Give them that comfort, that safety.”

Make it personal

If you’re competing against all-cash flippers, you already havea leg up: Most buyersdon’t want to see the home they’ve loved and lived in destroyed or turned into another cookie-cutter development.

“It’s an emotional reason, but people are more inclined to give to people who use it as their primary residence,” Shekhar says. “They’ve lived in this home for all these years and want future homeowners to have similar kinds of memories.”

Try including a lettertelling the sellers about yourselves—and your hopes and dreams for their property. Putting a face to a name—and a story to a face—can be a valuable way to secure the home you want.

From  Jamie Wiebe has written about home design and real estate for House Beautiful, Elle Decor, Veranda, and more.

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