How To Compete Against Cash Offers

How To Compete Against Cash Offers

You've probably heard people say: "Cash is king!" You've also probably heard a friend tell about how they missed out on a great home due to a cash buyer, or unfortunately lost out yourself.

But what makes a cash offer so great, and what are the best ways to compete against it if you're borrowing money?

Time And Risk

Cash offers appeal to sellers because they close quicker and come without the risk of financing failure.

Time:

A typical closing period for a transaction with a loan is 30 days. Before the lender gets to work, the buyer has to get through the inspection period. This is typically 10 business days, (14 calendar days with weekends factored in). Once the inspection period is complete, the lender typically takes the next 2 weeks between their underwriting process and getting appraisal results. Once the lender has everything wrapped up, law requires the buyers have the documents to review for 3 days before they can sign and close.

Because a buyer with cash is not working with a lender, they only need time for inspections and negotiate any repairs or credits necessary. Cash buyers often do not ask for sellers to complete repairs because they usually have the cash to do the repairs. This means buyers with cash can usually close in 10 business days (14 calendar days).

 

Here's how to compete with time:

  • Shorten your inspection period down to 5 days

10 business days is a very comfortable period to have a home inspection and have the necessary professionals do further inspections and bid issues uncovered. In 5 days you can have a general home inspection done, and get a fairly good picture of costs of any issues found. It will be tight, but it's possible. By shortening your inspection period, you can shave a whole week off of the timeline and only be a week longer than a typical cash offer. While it's still a longer close, it's close enough that you can still be competitive.

Risk:

A transaction can fall apart outside of the buyers or sellers control if there is a financing failure. The appraisal can come in undervalue or an issue can come up in underwriting causing a loan to not go through.

 

Here's how to compete with risk:

  • Waive your appraisal contingency if you have extra cash

In the chance that an appraisal issue arrises, you're still able to buy the home if you're able to make up the difference between the appraisal and sales price in cash. Appraisals coming in undervalue are not at all common, and this is one way to quell any seller fears of their home not appraising at value.

  • Offer terms "sold as-is" or "seller to do no repairs"

Sellers are concerned about what will come up on an inspection and what they'll have to fix or credit they buyer. Even if a competing offer is cash or slightly higher than yours, you can become more competitive with a terms like "sold as-is" or "seller to do no repairs". "Sold as-is" means you will not be asking the seller to do any repairs or ask for any credits after the inspection. You still have the right to do an inspection and decide if you want to move forward or back out at that point, but you are signaling to the seller that you won't be asking for anything after the inspection. "Seller to do no repairs" signals the buyer will only ask for credits from the seller instead of requiring them to make repairs. Sellers like this because they don't want to deal with the repairs and additional issues can arise once a contractor opens up a problem.

  • Waive your inspection contingency

One of the most competitive moves you can make is to waive your inspection contingency altogether. While you're not able to back out of the transaction based on issues found during the inspection period, you still have your seller disclosure contingency that protects you for 5 business days from receipt if you see anything that you don't like. If you already cut your inspection period to 5 business days, you're already protected in this period from the seller disclosure period.

P.S. - Write A Great Offer Letter

People want to work with people they like. If the cash offer is an investor who's about to tear the home down, you probably have a better story to tell. So tell it really well. 

The biggest risk of a transaction falling apart is from the buyers getting cold feet or falling out of love with the home. Show the seller how solid of a choice you are with a great offer letter to accompany your offer. Head here to see our tips on writing an offer letter to the seller.

7464 N Olin Avenue

7464 N Olin Avenue

Light & Bright In University Park

3 Beds, 1.5 Baths / 2,232 SF / $389,000

Light filled home located in high demand University Park boasts classic Portland charm. Spacious living and dining room highlighted by gorgeous fir floors. Peaceful front porch to sit and watch the world go by. Ample parking and storage with extra long driveway and detached 2 car garage or shop. Excellent ceiling height in unfinished basement. Newer high-efficiency gas furnace, drywall in bedrooms, and custom garage gate.

Anchored by the University of Portland, University Park is known for it’s mix of young vibrant youth and established neighbors. With tons of parks and location bordering the Willamette, let your kiddos and dog romp around Columbia Park’s 35 acres or head down to the water at Cathedral Park. University Park is an easy commute to downtown by bike, MAX or car. Minutes away from Adidas North American Headquarters, shops, dining, parks, and coffee refills - this neighborhood has it all.

MLS: 18065208

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our Listings:

How To Write A Winning Offer Letter

How To Write A Winning Offer Letter

Here's why writing a letter to the seller matters and how to tell your story

We're often asked if writing a letter to the seller to accompany your offer is a good idea. Our answer: YES! We have had clients who's offer has been accepted because their letter struck a chord with the seller, and we've also represented sellers that have solidified their choice based on the buyers letter. While home sellers are usually very financially motivated on who will pay the most, owners still want to see their home go to someone who will love the home the way they did. And a home 'love letter' can also help convince the seller that you're sure about your offer and won't back out of the transaction from getting cold feet. 

While a letter to the seller can help edge you above the competition, it can also work against you if there are red-flags or if it reads insincere. Here's our tips and ideas to think about when writing a letter that will help seal the deal!

The Do's:

Share what you love about the home

Your goal is to get the seller on your team and rooting for you! One thing you share in common with the seller (hopefully), is that you both love the home. Tell them how you fell in love with the home. Is it the beautiful landscaping, the old home charm, the neighborhood walkability? What you love about the home, they probably do too! If you think something has been taken care of really well, let them know. Everyone loves an honest compliment. 

You can help the seller feel safe in picking your offer by telling them how much you love the home. Sellers want to make sure they select an offer from someone who won't back out from minor issues that can come up during the inspection period. This is a good way to let them know you're a safe pick. 

Share [a little bit of] your story

Buying a home usually comes during a big change in life. Whether you're a first-time-homebuyer and ready to step into ownership, have a growing family, downsizing, upsizing - you have a good story to tell! Share your story -- but not too much. We find that the best letters are focused on how the home and neighborhood will be a great fit for you, but not all about you. While we want you to share how cute you are, make sure it's relevant to the home.

Share a photo

People love to put a face to a name. Share a cute photo to help personalize the offer you are submitting. 

Be sincere

At the end of the day, the best house love letter you can write is honest and sincere. There's a great reason you're writing an offer on the home, let that reason shine through. 

The Dont's:

Stay away from being too formal

To whom it may concern: please do not write your letter too stiff and formal. You want the seller to like you, not hire you as their corporate attorney. We've represented sellers that have been turned off by buyers letters that they think are phony. They laughed as they read "we will treat your residence with the utmost respect and ...". Let your emotion and humanness shine through in your letter. 

Try not to raise any red flags

Be conscious of what could be a potential red flag to the seller. Telling the seller how health conscious you are could backfire if they wonder how concerned you'll be about the potential lead paint or asbestos your inspector will point out because it's an old home. 

 

2164 NE Wasco Street

2164 NE Wasco Street

Charming Northeast Abode

4 Beds, 2 Baths / 2,614 SF / $715,000

Wasco_MLS-2.jpg

Proud Portland charmer located in the heart of NE. Striking period details combined with modern updates showcase easy, elegant living. Leaded glass windows and covered front porch set the scene upon entry. Main floor showcases rich craftsman details in formal living + dining room, open kitchen and meditation nook. Fir staircase leads to master and 2 additional beds up. Quality basement remodel hosts large family room and 4th bedroom. South facing backyard brings natural light throughout.

A+ location minutes from downtown and Lloyd center with excellent access to I-5 and I-84. Spend your weekends strolling down Broadway for coffee and off to Grant or Irving Park! This home feeds into Beverly Cleary K-8 and Grant High School.

Location

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Entry, Living Room, Dining Room & Kitchen

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Lower Level: Family Room, Bedroom & Bathroom

2037 SE Williams Drive

2037 SE Williams Drive

Kelly Creek Charmer

4 beds / 2.5 baths / 1,895 SF / $359,000

Charming 4 bedroom home in high demand Kelly Creek. Backing to green-space, this home combines community and privacy. Open floor plan with abundant natural light all year round.  Lovely updates include modern farmhouse butlers station in kitchen, new flooring, built-in shelving in bedroom, and amazing master suite closet organizer sure to please all fashionistas. Less than 1/2 mile walk from SE Community Park and Kelly Creek Elementary.

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