You’ve scoured the market, waded through thousands of ads, and visited dozens of properties. Finally, you discover the perfect house and want to make sure your offer is the one that ultimately gets accepted.
There’s no escaping the fact that making an offer on a property can be a stressful experience. With competition still fierce in the housing market, buyers are now having to go the extra mile with their purchase offers to edge out other prospective owners. Being pre-approved for a mortgage simply doesn’t cut it anymore and no one wants to pay over the odds when prices are already elevated.
To help, we’ve selected what we consider to be the top 2 ways to get your purchase offer accepted, as well as a bonus tip that is proven to give you an edge. With the following tips, you can take a lot of the guesswork out of the equation and feel confident you’re making the best offer possible.
1. Sellers prefer all-cash offers
It’s not exactly breaking news that sellers prefer cash. All-cash offers provide a level of certainty that financing doesn’t with less red tape and fewer setbacks from lenders. Real estate has coached sellers to see all-cash buyers as preferred customers, offering a much more streamlined selling experience.
Of course, this means having cash on hand. Traditionally, this has meant investors, home buying companies, and those with considerable wealth were at a distinct advantage. Their deep pockets mean they don’t need to wait for the sale of another property to complete before making an offer.
With data showing that all-cash offers quadruples your chances of snapping up your dream home, to give yourself the very best chance you may want to consider offering an all-cash offer yourself.
While you may not have the cash ready and waiting right now, several companies now allow you to make cash offers before your own property sells.
Once pre-approved by these companies, you can make all-cash offers on properties, this gives you the edge over regular buyers and allows you to compete with bigger interested parties.
There are 2 different types of cash offer companies now on the market. The most common is bridge-loan companies that will provide the funds to make cash offers before your mortgage closes. The other is cash-backed offer companies that promise to fund a purchase with cash should your mortgage not be cleared by the closing date.
Both types of cash offer company typically take a fee between 1% to 3% of the offer amount with the rate varying based on whether you use the company for your mortgage or you’re using a different lender.
The pre-approval process is fairly standard with lenders looking at your credit and financial background history through bank statements, paychecks, and tax returns. The process differs slightly between states with the biggest cash offer companies being:
You’ll also want to make an earnest money deposit, which is another point where cash can give you a leg up against the competition. While many buyers choose to offer sellers a modest earnest money deposit of just 1% to 2%, putting your money where your mouth is and offering a more sizable deposit show a commitment to buy that is hard to ignore.
While this money is potentially at risk should things fall through at the last minute, if you’re sure you’ve found the right property, this can demonstrate a readiness that sellers will understand.
2. Understand your seller and write a letter
Understanding why the seller is moving can also help you get your offer accepted by accommodating to their situation. Alongside an all-cash offer, crafting your offer to suit them will show you’re flexible and easier to deal with.
For example, some sellers may be frustrated by deals collapsing at the last hurdle due to financing issues. They may therefore be keen to only deal with potential buyers that are serious about purchasing and not simply testing the waters with low offers and negotiation. Such motivated sellers will appreciate firm, listing price (or higher) offers in cash that shows you are serious about purchasing the property.
On the other hand, if your real estate agent explains the seller is keen to organize a sale but will not be ready to move until a later time, catering for this will give your offer an advantage too.
Most buyers are eager to move in as sellers are to move out and the idea of waiting months for children to finish a school term or other life events to play out first can be off-putting causing them to look elsewhere. Your offer will have an enormous edge if you demonstrate patience with sellers that are not ready to move.
You should also accompany your offer with a letter.
This does not need to be too long, a single side of paper will suffice but it should include a little about you; why you want to buy their property; and what your plans are for the home. If possible, demonstrate an understanding of their situation, whether it be a desire for a quick sale, frustration over the selling process, or willingness to commit early.
Bonus: Waive financing contingency
You can also lever an all-cash offer to your advantage by waiving any financing contingency clauses. Such contingencies allow buyers to back out of sales if financing falls through in the event of lenders deciding to alter the loan amount or if interest rates change affecting your prospects.
Offers that choose to waive financing contingency are typically 66% more likely to be accepted than those that don’t. Sellers consider customers who waive this contingency to be committed and it puts your offer in good stead if you can forfeit it. Other contingencies tend to be less effective at getting offers accepted.
There is risk involved if financing collapses with your earnest money deposit at risk if things fall apart. If using an all-cash offer, however, you can safely waive this contingency.
Takeaway
Armed with these tips you should feel a lot more confident in submitting offers on prospective homes. The double-whammy of an all-cash offer and understanding the seller’s motivation, as well as waiving financing contingency will give your offer the very best chance of getting accepted.