How to Compete with Cash Buyers in the Housing Market
The housing market is as tight as ever. With interest rates on the rise, folks are looking for anything to give them an advantage over other buyers. One tactic that many have adopted is to make cash offers on homes. By using capital already at their disposal, cash buyers are able to move much quicker to get a deal done than those needing a mortgage to purchase a home.
There are ways to stay in the game even if you don’t have a money tree sprouting up in your yard overnight. Here are some tips to compete with cash buyers in the housing market.
Pre-approval Is a Must
The number one hindrance to you beating out cash buyers is the need to be approved for a mortgage. It’s not the need that puts you at a disadvantage; it’s the time. If a seller has a cash offer and you’d like to enter a bid but still need to be approved for a mortgage, the seller is likely to accept the cash offer with little consideration for your bid. If they are in any way uncertain that you won’t get approved, they won’t risk losing out on an offer that has little risk of falling through. However, If you get pre-approval, you can stay in the game because sellers will be assured that your offer has some “oomph” to it. This helps mitigate the time spent as well as raise everyone’s confidence that a deal can get done.
Beat the Asking Price
If at all possible, offer more than the asking price. Doing this along with getting pre-approved for your loan accomplishes a few things. One, you can take control of the conversation by making cash buyers hesitant to enter a bidding war. You also take the attention away from potential cash buyers and put it on your offer.
Waive (Some) Contingencies
Doing away with some contingencies can help you match the speed of cash offers with some of your own. Waiving your sale contingency in particular can increase the odds of your offer being accepted. The same goes for your financing and appraisal contingencies. However, doing so is not without its risks. You may find yourself in a tricky situation where you end up spending more than you wanted to. This is why one contingency you should leave in place is an inspection. It’s one thing for an appraisal to come in low and you’re unable to renegotiate, but it’s quite another to buy a home with extensive issues. The inspection contingency protects you from this by still allowing you to back out if you find significant issues during the inspection.
Beat Cash Buyers and Buy the Home You Want
Buying your home is a big decision, so having support from the best realtor in the Twin Cities is essential. If you’re interested in purchasing a home, give me a call.
I was born and raised in Eden Prairie, Minnesota and have a passion for helping my clients find their dream homes. When I work with you, I take this motto to heart: “Put in the work today that most people won’t, in order to have the success tomorrow that most people can’t.” With personal service and local knowledge, I will work with you throughout the homebuying process to get you where you want to live. Be thorough with your home inspection and your home search with my network of resources. Let’s connect to find the home you’ve been waiting for.