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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Written by Holden Lewis
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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.

What is a cash offer on a house?

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.

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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?"

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