I recently shared this article on the First Team Blog. Buying a home can be an exciting yet challenging time. You start your search, probably on-line, you drive by and attend open houses and finally find an agent who you trust to represent you. At last, the right house is on your radar!
Now that you have found it, you realize you may be competing against several other buyers. It is then that you hear those dreaded words, “There is a cash buyer bidding on this home.” As an agent I have had to tell my buyers this several times. In Southern California cash buyers are often large corporations put together to flip properties or foreign investors.
Some become so dejected that they don’t want to go forward with an offer. But this is exactly when a buyer needs to step up and develop strategies to have their offer accepted.
Cash buyers will tell the seller that they have cash and can close quickly. They often don’t ask for any repairs and they don’t need an appraisal because there is no loan involved. It sounds pretty attractive, doesn’t it? Many cash buyers want to buy the home as an investment property and they intend to rent it out.
Building a strategy
They want a DEAL to make their cash flow profitable. Because of this their all cash offers are most often at a discounted price—many thousands lower than what a person wanting to live in the home will offer. With this understanding, let’s talk about a strategy for your offer.
- Make it all about the seller. First, be sure your agent talks to the listing agent to see what the seller wants. How long do they want the escrow to be? You can give them what they want.
- Be flexible. Do they need to purchase something else? You can be flexible, giving the seller additional time if they need to find a new home themselves before selling their current property.
- Offer to rent back. Will the seller need to rent back before they move out? You can allow them to rent back 30 days to give them time to tie up loose ends and figure things out. Best of all if your finances allow for it, let them rent back for a discounted amount or for nothing at all but a security deposit.
- Research past offers. Most importantly, find out if there have been other offers that the seller turned down. Try to discover the rejected price and offer more than that—preferably at the list price or slightly above or below that price.
- Make a good first impression. If these are the first offers to be considered, then offer full list or just above, provided the comparables support this price and you REALLY want this house.
- Make it personal. Lastly, find out about the seller and their connection to the neighborhood and the house. If they have lived there a long time, they will have lots of memories and will want buyers who will cherish the house the way they have. Write a letter, include a picture and let the sellers know what THIS house means to you.
These strategies may not always work, but Debbie Miller and I have found them to be successful over 60% of the time. Don’t let cash offers intimidate you. Just GO for it!