There are a few tips buyers using financing can use to compete against all-cash buyers in our market to get the home they want.
If you’re a buyer using a loan to purchase a home in our market, here are a few tips to give your financed offer a competitive edge against all-cash offers.
First, be upfront with your finances as much as possible. This will make the seller more confident in your ability to close. If you can’t make an all-cash offer, there are certain questions you can ask yourself to improve your financed offer. For example, can you make a 20% down payment? The higher you can make your down payment, the better you look in the eyes of the seller. Also, are you well-employed? Longstanding employment can make your loan look stronger.
You can also let the seller know how much cash reserves you have, how little debt you have, and how good your credit is. There’s no guessing game on their side regarding your ability to close, even though your pre-qualification says you can. Sometimes lenders don’t always issue the best pre-qualifications for the best buyers.
Next, try asking your lender to get a head start on the process. For instance, our lender can meet with you, even if you don’t have a home identified, so they can gather and prepare the documents they need to close once you do have one picked out. Once they have all the documents in place that would cause an issue or a cancellation, they can make certain guarantees regarding your closing date and your ability to close.
Another thing you can do is shorten your loan and appraisal contingencies. With the way sale contracts are written, buyers have the ability to cancel based on getting a loan denied or the property not appraising within a certain time frame. If you let the seller know you’ll offer a higher number than a competing cash offer and tell them you’re doing a one-week appraisal contingency because you know they’re worried about appraisal issues, that will inform them of any issues within a week, instead of a month, and give them the option to go with the cash buyer later on.
Additionally, you can pre-order the appraisal and pay the lender up front so it’s already paid for once the lending process starts. You can tell them to order that on day one when you’re identifying the house you want or you know that an accepted counteroffer is coming back.
Another great tip is to inspect the house quickly. Typically we do a 10- to 12-day inspection period. We work with multiple inspectors, so we can work around your schedule and make sure the inspection is completed within two or three days, if need be.
Lastly, remember that most cash buyers expect to get a better deal from sellers, so you need to offer the best price possible. That will give you an important advantage over a buyer who expects to get a better deal just because they’re paying cash.
If you have any more questions about the home buying process or you’d like a free buyer consultation, don’t hesitate to reach out to me. I’d love to help you.