How to compete with all-cash offers

Home buyers with cash on hand have several advantages. Much of the hassle that comes with selling a home — dealing with the buyer’s financing — is eliminated in a cash transaction. If you’re shopping for a house, there’s a chance you’ll be competing with all-cash buyers. In one recent period, 44.4% of U.S. home buyers paid in cash, according to RealtyTrac, a California-based firm that tracks real estate trends.

But there are ways you can successfully compete with all-cash buyers. Here are some tips:

• Make your best offer up front.
Many all-cash buyers are bargain hunters, whether it’s because they’re investors or because they know being a cash buyer puts them in a strong position. Beat them out by making your final offer up front. You might avoid asking for closing costs, which means cash out of the seller’s pocket.

• Go beyond preapproval.
Presenting a mortgage preapproval letter from your lender when you make an offer is the traditional way to show you’re a serious buyer. Preapproval is more rigorous than prequalification and gives the seller confidence your financing will come through. But getting an underwriter’s review of your loan application prior to making an offer is emerging as a more thorough first step. In this process, the underwriter reviews all income, asset and credit documents, and actually underwrites the loan.

• Give them what they want.
When you’re submitting a purchase offer, there are many points of negotiation. If you’re trying to compete with cash buyers, a smart strategy is to give the seller what they want on every other point since you can’t offer all cash.

It takes some savvy to beat out an all-cash offer, but it can be done!