If you are a first time home buyer, I bet your wondering how to compete with cash offers. I know that my current clients have this thought in mind, especially since at this moment in time, the market is red HOT in specific New Jersey towns because of a lack of housing inventory, because mortgage interests rates are still relatively low and because in many places in NJ, the market has bottom-out.
Here’s what you need to know as you compete with cash offers:
1. Cash offers are not always KING! If you are utlizing a buyer’s agent, like me, to make your offers on homes that interests you, more than likely your offer comes with a cover letter that explains who you are, the reasons why you LOVE the home and your offer rational in detail.
People forget that buying and selling a home is an emotional process and it’s not always about the money – well, it’s almost always about the money, but on occassion you might get a seller who will give you a break and listen to your story, your rationale for why you want to buy the home; on occassion you might get a seller who will allow a little emotion. In my opinion, the most committed buyer wins!
So, your level of commitment has to come across in your cover letter. This letter is not necessarily a letter written by you, but if you want to write a letter to the seller and give it to your buyer’s agent to submit to the seller along with your purchase contrect or offer, then so be it.
Next, your agent should/will explain to sellers that sometimes cash offers are not always unattached! Cash can come from family and family may end up feuding throughout a transaction, which could result in a lost sale. It may come from a unrelated, non-principal buyer who may have a change of heart, or from someone having to sell real estate, or from a refi or home equity line of credit (HELOC), 401K, stocks, which all of these liquation techniques takes time to process, time that could result in a lost sale.
2. If you’re offering financing, and they are offering cash – be flexible with terms, closing date, remove any seller assist and agree to buy the home in the as is condition or for top dollar.
3. Add an escalation clause to the offer which outbids others offers by X amount, $1,000 is typical, but up to a firm limit. Think eBay!
4. Add more money upfront to the good faith deposit to hold your offer.
5. Include a mortgage commitment, subject to a satisfactory appraisal. This will show a seller that you’ve already submitted all of the necessary documents to your loan officer, ergo making your offer as good as a cash offer.
This to me is a good start to helping you compete with cash offers and should maximize your offer’s potential.
Republished with Permission from http://www.agentknowhow.com/social/blogs/1/16/how-to-compete-with-cash-offers