How to compete with cash offers!

Question

Hey BP!

I've had some challenges the past few months in search of my next property. I'm looking for an owner occupy multi family. I've now lost to cash each time all while being as aggressive as I can be that still makes sense. Any helpful tips to make my offer more attractive. I've copied a list of things my agent and I have tried.

Thank you

• Waived Inspections
• Escalation Clauses
• Money towards a difference in offer price and appraisal (i.e. if it appraises too low, I will pay out of pocket to cover)
• Offering to pay for up to "X" amount of money for potential things found wrong during an inspection
• Wrote letters to the sellers
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*One offer I lost I offered $42k more than what the house closed for but they had cash where as I needed my financing (I also had waived an inspection).

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Mike Dymski · Answer

Debt - mortgage pre-qualification letter

Speed - same day offers when properties hits the market

Volume - make a lot of offers

Agent - good agents are closers

Marketing - direct to owner

Alexander Szikla · Answer

Persistence. Persistence. Persistence. It is a numbers game!

The fact that you are competing with all cash means you are identifying solid deals which is already a step in the right direction

Carson P. · Answer

I would also increase your earnest money. Sellers like to see higher EM deposit as it shows seriousness of the buyer.

JD Martin · Answer

If you had a bid higher by $42k here's what likely happened (one or more):

1. The seller knew you'd never get financing at that amount;

2. The price of the house was so expensive here that $42k is relatively small (say prices over a million);

3. Your earnest money was weak compared to the competition;

4. Your loan contingency was shaky (VA, or 90% financing, etc);

5. The rest of your offer was weaker - longer close time, etc.

If you are getting financing, then you are almost always going to be at a disadvantage in terms of closing time, since cash buyers only have to get an inspection and title work done. I have closed on houses in 2.5 weeks that I bought cash. You're not going to do that with financing. If you can bump up your earnest money, then you can possibly be more competitive there - $10k in earnest money vs $1k is going to sway a lot of sellers.

Patrick Britton · Answer

@Anthony Simboli  question:  do you think ANY offer without a home inspection or overpaying by way of appraisal gap coverages is a smart investment?  and i've had my fair share of non-refundable EMD and it rarely makes a difference to the seller.  they want as much money right now and no chance of failure.  So you know what, forget them!  find something else because you're chasing price and that's always a sure way to lose money.

You don't have to play in a market that's lost its damn mind.  Let someone else make a terrible mistake that they'll regret for years to come.

Mason Hickman · Answer

@Anthony Simboli

Three more you can add to your list:

1. Make inspections “for informational purposes only”

2. Make your initial deposit non-refundable. If you back out for whatever reason, they still keep your money

3. Agree to cover a shortfall in appraisal price; this can be up to a certain amount or agree to cover the full amount

Jonathan Greene · Answer

Here are a couple of tips I didn't see above.

1. When you submit an offer with financing attached, you should also submit a Proof of Funds. There is a BIG difference between an investor buying with a mortgage because it's smart (has a supply of cash, doesn't have to be for the whole boat, but enough to know it's not a worry) and an investor buying with a mortgage and using all of their money for the downpayment (not solid).

2. Each letter should be designed for the end-seller. If you are buying from an owner who has lived there for a while, you pull on heartstrings about how you want to live in or renovate their house but keep the character of it so that their legacy persists. If it's heirs, you make sure to acknowledge their loss and that probate and all heirs agreeing is not easy. A mortgage will give them time to decide what to do. You also explain in the letter that you can offer more money with a mortgage and that, at closing, they still get the cash.

3. Have an extra letter from your lender streamlining the closing process and see if they can underwrite you beforehand to trim down the process and present that as a quick-close mortgage option.

Forrest Faulconer · Answer

Wow, 42k more and you didn't get it! Who are those sellers and what are they smoking??

Jesus Roman · Answer

@Anthony Simboli Wow! That just shows what type of market we are in right now. Every thing you stated is what I would have suggested, all you can do right now is to be consistent and not get discouraged. You are not the only one dealing with these bidding wars, so you are not alone. Cheers from Houston,Texas!Best of luck!

Julio Garcia · Answer

Keep at it! You'll bank one

How to compete with cash offers!

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