With all the recent talk of cash buyers and big investors swooping in and buying real estate, a lot of first-time buyers assume that if they have to get a loan, they can’t compete. Many times this thinking keeps a would-be buyer on the sidelines.
But it’s important to educate buyers that cash is not always king. For starters, cash buyers expect some a discount because, by paying cash, they’re eliminating some of the risk of loan approval for the seller. A smart buyer can counter a cash buyer simply by making their offer as airtight as possible, such as being fully approved before making an offer. This means having the mortgage professional fully vet the buyer’s finances so there won’t be any surprises.
Buyers can take it a step further. Before making an offer, they should have the mortgage pro get as much information about the property. If the lender feels strongly about the buyer’s finances and the property doesn’t seem to have any obvious red flags, the buyer’s offer should include a short window to get the loan approved. Many sellers assume they have to wait 30 to 45 days for a buyer to get their financing in place. But if the buyer has their financial ducks in a row, they should shoot for two weeks to get financing.
Also, because cash buyers expect a discount, buyers can counter their offer by paying more. Though this may sound crazy, paying more doesn’t necessarily mean “overpaying.” It may simply mean paying market value, which a cash buyer won’t pay.
Finally, many home sellers, particularly long-term homeowners, like to know that someone will be living in the home and that there’s a real “person” behind the offer. When a seller is faced with two similar offers— one from a cash investor and the other from a person who really wants to live in the house and makes that known—a buyer with a clean, solid offer may beat out the all-cash investor.
Excerpt from Zillow Article
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