Stand Out in Reno, Nevada's Competitive Housing Market: Three Ways to Beat a Cash Offer
Are you putting offers in on homes that are being beat by cash offers?
No question, it can be extremely frustrating. If you are in a hot, competitive seller's market you know how tough it can be with multiple buyers competing on one home. You put an offer in on a home only to have it slip through your fingers to a buyer who sweeps in with a cash offer. The reality is that cash offers may not be the best for a seller. Sure, it may seem more attractive to a seller because they don’t have to worry about a buyer getting financing. They think it’s easier because they don’t have to worry about financing falling through because the buyer cannot qualify for their loan or the appraisal comes in short or the process is longer.
Normally, on average a purchase can close with financing in 30 days, compared to a cash closing that takes only a couple of weeks to close. Many cash offers come in below asking price because they know they can entice a seller with a fast closing. When you're financing your home using a mortgage, you're not going to be able to have as much leverage to negotiate a lower price like a cash buyer. It may seem like you are at a disadvantage against a cash offer because a cash offer is guaranteed money that moves a lot faster than you purchasing the home using financing. However, there are several methods you can use to have your offer stand out and seem more acceptable to the seller.
Let’s dive in and look at how to beat a cash offer, beginning with number one which is to make sure you are fully pre-approved.
Get Fully Pre-Approved
When you're talking with your lender you want to make sure you submit all of your documents and have the underwriter take a full look at your file and give you that approval upfront. Be sure your pre-approval letter is submitted with your offer and then ask your lender to call the seller and let them know that they have all these documents and that you are indeed approved.
Sometimes this call can let the seller know that everything is good to go and that there is not going to be an issue with the loan. This can make the seller feel more confident about the loan closing on time.
Submit Your Best Offer
The third thing to do is to submit your best offer. A competitive market can be tricky to negotiate a lower offer and if you are up against cash buyers, you need to be prepared to put your highest and best offer together. Some savvy sellers are more willing to take cash offers because they know that they don’t have to worry about an appraisal coming in short on value, so be prepared to include an appraisal clause letting the sellers know that if the appraisal comes in lower than your offer, you are willing to put up the additional money that is not included in your financing to close the transaction.
Shorten Your Closing Time
The fourth thing you can do to beat a cash offer is to shorten your closing time. If you are already pre-approved by your lender, you may be able to take your closing time down from 30 days to maybe 20 days or 15 days. Be sure to talk with your lender about what their closing times look like before you discuss this with the seller, but a shorter time frame 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 out too long so letting the seller know that you can close in less than 30 days can help them feel more comfortable accepting your offer.