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How to Compete With Cash Offers When Buying a House
Compete with cash offers when buying a house by focusing on the seller's motivations and needs.
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Holden Lewis Senior Writer/Spokesperson | Mortgages, homebuying
Holden Lewis is a mortgage reporter and spokesperson who joined NerdWallet in 2017. He previously wrote for Bankrate, where he wrote about mortgages and real estate during the housing boom and bust. He has written articles about mortgages since 2001, and enjoys explaining complex topics to regular people who don't buy houses every day. Holden has been president of the National Association of Real Estate Editors and has won numerous writing awards. He splits his time between Jupiter, Florida, and Fort Worth, where he is renovating the house where he spent his high school years so he can move back and be a Texan again.
Alice Holbrook Assigning Editor | Homebuying, savings and banking products
Alice Holbrook is a former editor of homebuying content at NerdWallet. She has covered personal finance topics for almost a decade and previously worked on NerdWallet's banking and insurance teams, as well as doing a stint on the copy desk. She is based in Ann Arbor, Michigan.
Home shoppers face fierce competition in today's real estate market, where would-be buyers outnumber sellers. Cash buyers have an advantage because they don't have to wait for a mortgage lender's approval. In October 2023, 29% of home sales were to cash buyers, according to the National Association of Realtors.
When a buyer makes a cash offer on real estate, it means they don't need to use a mortgage, as most homebuyers do. They have enough in the bank to buy the property, or they'll have the money after selling their current home or assets such as stocks.
In a hot real estate market, money talks, but not everyone can make a cash offer on a house. If you need to use a mortgage to buy a home, here are strategies for competing against cash buyers.
To compete with cash offers, find out what sellers want
As you prepare an offer, you tend to focus on what the seller has (a house) and what you want (their house). But you'll gain a competitive edge by viewing the transaction from the seller's eyes: What does the seller want?
If you believe the answer is "money, duh!," you need to exercise empathy and imagination. Sellers want a high price, sure, but they have other goals, too. You may be able to beat cash offers by identifying what else the sellers want, then giving it to them.
"People are selling the house for a reason: job loss, job gain, births, deaths, divorces, marriages," says Chuck Vander Stelt, a real estate agent in Valparaiso, Indiana, and founder of quadwalls.com. "Some life event is causing them to sell the home. Buyers need to make offers that solve the sellers' problems."
The best way to peek inside the mind of your seller is by instructing your buyer’s agent to call up the listing agent and ask, "What are terms that would be especially beneficial to your sellers?" Vander Stelt says. Try to discern what motivates the sellers. What can you do to help them?
Here are common items on home sellers' wish lists:
A hassle-free transaction with easy-to-work-with buyers.
The highest price.
For the buyer’s transaction to close quickly and on time.
To deal with as few contingencies as possible.
To remain in the home after closing for a few days up to two months.
To avoid paying for or supervising repair work.
Think of these desires as problems you can solve. If competing cash buyers aren't able or willing to solve the seller's problems, you may have an advantage.
The least hassle possible
"Make your offer very easy to accept," Vander Stelt says. Use a well-known mortgage lender, make the offer clear and concise, and conceal your frustration at losing out on previous offers you made.
For example, don't demand a response to your offer within two hours. "That doesn't indicate that you're easy to work with," Vander Stelt says. "You're trying to put stress into the equation just to get your way. Who wants to work with that?"
This advice is hard to accept if a previous seller used you as a pawn, leveraging your offer to squeeze more from a competing buyer. Unleashing your righteous anger onto the next seller might feel satisfying, but it's not an effective negotiating posture.
Keep it simple: When you know there will be multiple offers and some of them may be from all-cash buyers, take your feelings out of it and ask yourself, "How can I make my offer the easy one to accept?"
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
500500
Min. down payment
3.5%New American Funding works with down payment assistance programs in 14 states, including California, Texas, Florida and Illinois.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
580580
Min. down payment
3.5%First-time home buyers may qualify for 3% down mortgages at Rocket.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
620620
Min. down payment
0%Veterans United offers VA loans for as little as 0% down.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
620620
Min. down payment
0%On VA loans, NBKC offers down payments as low as 0%.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
4.0
NerdWallet rating
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
500500
Min. down payment
3.5%New American Funding works with down payment assistance programs in 14 states, including California, Texas, Florida and Illinois.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
620620
Min. down payment
3%NBKC offers conventional loans for as little as 3% down.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
580580
Min. down payment
3%Rocket Mortgage offers conventional mortgages with as little as 1% down.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
580580
Min. down payment
3%New American Funding works with down payment assistance programs in 14 states, including California, Texas, Florida and Illinois.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
4.5
NerdWallet rating
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
580580
Min. down payment
N/ANew American Funding works with down payment assistance programs in 14 states, including California, Texas, Florida and Illinois.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
580580
Min. down payment
N/ANew American Funding works with down payment assistance programs in 14 states, including California, Texas, Florida and Illinois.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
500500
Min. down payment
3.5%New American Funding works with down payment assistance programs in 14 states, including California, Texas, Florida and Illinois.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
580580
Min. down payment
3.5%First-time home buyers may qualify for 3% down mortgages at Rocket.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
620620
Min. down payment
0%Veterans United offers VA loans for as little as 0% down.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
NerdWallet's ratings are determined by our editorial team. The scoring formula incorporates coverage options, customer experience, customizability, cost and more.
Min. credit score
620620
Min. down payment
0%On VA loans, NBKC offers down payments as low as 0%.