If you’re shopping for a home, there is a good chance that you are competing with all cash buyers. In January, 44.4% of American home buyers paid in cash, according to RealtyTrac, a California-based company that follows real estate trends.
These are firms scooping up investment properties to rent out or foreigners. International buyers account for about 6% of home sales, but over fifty percent pay cash, partly because they can’t acquire mortgages.
Here’s one major reason someone offering to acquire a home with cash is of interest to the owner: Much of the hassle that include selling a home – coping with the buyer’s capital – is taken out.
Now you realize why people say “Cash is king! “
The issue isn’t whether a would-be buyer is borrowing the amount of money used to cover the home. After all, when you sell something do you really care whether the customer has to borrow the money to be able to buy from you? Of course not necessarily; you just need to get your money when closing.
So here are 6 tips to avoid getting outbid by cash buyers:
1. Go through a lender that will give you a full qualification: That means he’s running your credit and will fully prepare your loan. All you have to do is find acceptable collateral, it is generally regarded as a much stronger offer because the buyer is fully qualified.
2. Pay closing costs: Depending on the state you’re in, closing costs will be approximately about 2% for the seller, consider bearing the cost, the seller will look at your offer far more favorably.
3. Let the seller’s agent pick the closer: In many states this is a title organization and they’re all really equipped. It doesn’t make a difference to me who brings home the bacon (as long as it closes), so let the seller’s agent pick, they have personal connections they might want to cultivate and they’ll be prone to advance your offer better.
4. Make aggressive offers: If you are not finding properties well worth making aggressive offers on, keep looking. When you find a property that’s worth more than the selling price, offer what it is worth. If you’re making weak offers, especially as a financed offer, you’ll lose out there.
5- Put out your financing contingency: This may be risky, but if you are fully qualified and you have an option period, it can be a risk worth taking. As soon as your offer is accepted, make sure your lender can provide you with a specific answer within the option period, if perhaps you’re not comfortable you can still opt out.
6- Be sure your agent has you on auto search: This might seem obvious but the listings get to you much more quickly. You could also consider writing an offer immediately it pops up if you’re just flat out getting beaten to the punch, just be sure you have an option period.
Basically, avoiding getting outbid on houses boils down to finding out what is important to the sellers. For many sellers, the closing time is crucial. Cash buyers usually means a faster closure… but not all buyers want a swift conclusion. A seller who has bought a new house under construction can be required to wait several months or more until the new house is ready for occupancy, so that a buyer who can wait would be preferable to a buyer ready to pay cash and close now.
How To Avoid Getting Outbid By Cash Buyers