How to win Deals against cash Offers in a multiple offer scenario

[Frank Mongiello]

When looking at towns in West Palm, North Palm, Palm Beach Gardens, Jupiter and Tequesta, it seems that any house in decent condition is getting 4-5 offers. In addition, at least 1 is cash at or above list price. I am going to talk about some strategies I use and would like to hear from others on what they are doing. 

1. Large Binder Deposits: This is one my broker highly encourages and I have seen it go a long way. Standard binder deposit on a conventional deal is 2%, I like to go much higher to 5 or if the buyer can 10%. When the listing agent is looking through similar offers and sees one with a 50k binder, your offer will immediately stand out. Your deposit is going towards your down payment so as long as you use your due diligence period properly there isn't a huge downside. 

2. Cash over appraisal of appraisal wavers: I've heard other states don't allow appraisal waivers, but in South Florida they can make a deal. If your lender has all the documents they need from the buyer and there are enough comps in the area, they can type the information into their system and see if it qualifies for a waiver. I've tried to figure out how I can better predict when it is a possibility, but every lender I ask doesn't have an answer and relies on their systems algorithm. Often the reason the sellers prefers cash is because of fast closing but more importantly not having to worry about low appraisals. By removing that risk your offer doesn't differ much from an all cash deal. If the property doesn't have the ability for an appraisal waiver and the numbers make sense, bidding cash over the appraised value is your next best option. 

3. Tight loan approval periods: Many lenders set a standard for 21-25 days to get your final loan approval approved by the underwriter. That means that after 20 days if the underwriter finds something unexpected and denies your application, you would be free to walk out of the contract with all your deposits refunded. The seller has to then put the house back on the market after 20 days of being under contract, and either start from square one or call back buyers who had 20 days to find something else. You can see why listing agents would flag longer approval periods and why those offers wouldn't be as strong. 

4. Having your lender call the listing agent with a du approval: If your agent is the only person calling the listing agent in a multiple offer scenario, you might be in trouble. The listing agent and seller are going to want to know who is approving the loan and find out how much work they have actually done gathering your documents. Many people can go online, type in a couple numbers and get "pre approved or pre qualified" in 30 minutes. 

5. Making the decision more emotional: Unless the seller is an absentee owner looking only at the bottom line, chances are they had a lot of memories in the house. Them selling isn't as easy as collecting a check and deep down they want to have the piece of mind that whoever buys isn't going to treat the house poorly or anger the neighbors. An emailed letter explaining who you are and why you are buying makes you a real person, not just numbers on a contract.

If you got this far thanks for reading and let me know if you have anything to add!

[Joe Splitrock]

I am not in your market, but these are all good methods. I didn't see escalation offers as one of your methods. I am not sure if these are used in your market. It can be immaterial if multiple people submit escalation offers. Waiving inspections always helpful. The less contingencies there are, the less opportunity for the deal to go south. Skipping due diligence may be risky, so spend time in the property inspecting, prior to making the offer. You can also compete against cash offers with cash offers. Even if you don't have cash, there are lenders who will offer quick loans to act as cash for a short period. You pay a premium, but nothing fights cash like cash.