5 Strategies to Beat an All-Cash Offer

You’ve probably heard recent stories of bidding wars and all-cash offers taking place more often. The truth is, getting beat by an all-cash offer is all too common for many new homebuyers today. All-cash offers are attractive to sellers for obvious reasons—they close fast and the money is all but guaranteed. So if you’re frustrated or disappointed, you’re not alone. But you can beat an all-cash offer with these five strategies.

Related: Find out why getting pre-approved can help you win your next offer

USE THESE 5 STRATEGIES TO BEAT AN ALL-CASH OFFER

As we head into the holidays, there tends to be less inventory on the market and more stress in the negotiations. So yes, all-cash offers are on the rise in today’s housing market (almost 1 in 4). But these five strategies will help you compete against an all-cash offer.

1. Get pre-approved for your new mortgage

Getting pre-approved for your mortgage means that your lender has fully verified your loan. Your credit report, finances, income verification, employment—every step has been completed and your loan is all but funded. This gives the green light to the seller that your loan is fully approved, not just pre-qualified.

Ultimately, when you get pre-approved for a mortgage, the seller knows your financing will follow through as promised.

Related: How to FAST TRACK your mortgage pre-approval

2. Increase your good faith deposit (earnest money down)

Your good faith deposit, or earnest money down, is the amount you put down to reserve your right to buy the home. A good faith deposit shows the seller that you’re serious about your offer. If you decide to walk away after you’ve made an offer with earnest money down, the seller can keep your deposit.

It’s a strong move to show the seller how much you’re willing to risk losing (if you walk away) and that you’ll do everything you can to win the bid against an all-cash offer.

If you want to stand out in the competition, consider increasing your earnest money down. If the seller rejects your bid, you won’t lose your good faith deposit. But it shows the seller how much you’re willing to risk with real dollars.

3. Make an offer above the asking price

All-cash offers often come in under asking. Even in a bidding war, homebuyers who bring an all-cash offer are betting that the seller will lower the price in exchange for an easy sale. This is your opportunity to raise your offer. Going above asking is another way to stand out and beat an all-cash offer. 

Consider talking to your realtor about including an escalation clause. This allows you to raise your offer automatically (up to a limit) if someone else bids higher.

Related: Learn the truth about closing costs and zero-cost loans

4. Waive a few contingencies

All-cash offers make the transaction easy on the seller. You can make things even easier by waiving some of the standard contingencies. For example, consider waiving the financing contingency—this means you won’t be able to back out of the offer if the mortgage doesn’t fund. But if you get pre-approved for your mortgage, you can be confident that your loan will be funded.

Related: 5 Hidden Costs of a Home Remodel

Talk with your realtor to consider waiving other contingencies as well: the appraisal contingency, sale contingency, and inspections contingency. Discuss each contingency with your real estate agent and decide what kind of risk you’re willing to take. Waiving contingencies is a great strategy to win over a seller and beat an all-cash offer.

5. Write a personal letter

Believe it or not, writing a personal letter to the sellers can really make a difference. Buying and selling a home is an emotional decision for most buyers and sellers. Writing a letter is a reminder that we’re all human here.

After the offers and financials are considered, a personal letter can go a long way to help you stand out and beat an all-cash offer. Many homeowners actually choose buyers who they can imagine living in their home once they’ve packed up and moved on.

You can include specific things you love about the home, why it’s a great fit for your family, or how you see your family growing and building a life here. Don’t be afraid to set yourself apart and bring your emotion to compete against an all-cash offer.

Taking Action

If you’re shopping for your next home, getting pre-approved for a mortgage is the best action you can take. You’ll be able to shop with confidence, especially if you’ve to beat an all-cash offer. We can guide you through the process and help secure your best mortgage so you can know exactly how much you can afford. There are several loan options and benefits available depending on your homeownership goals. Connect with a local mortgage advisor to get started. We’d love to help.