Home shoppers can face fierce competition in today's real estate market — particularly in popular areas where would-be buyers outnumber sellers. Cash buyers have an advantage because they don't have to wait for a mortgage lender's approval. Between July 2024 and June 2025, an all-time high of 26% of home sales were to cash buyers, according to the 2025 Profile of Home Buyers and Sellers published by the National Association of Realtors.
What are cash offers, and why do sellers prefer them?
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.
As a buyer, you may have experienced how demoralizing it feels to lose out to a competing bid. Sellers suffer similarly when they accept an offer, but the buyer withdraws because of mortgage qualification problems. This is one reason that sellers find cash offers attractive: There's no lender to say no.
DATA: What's the Homebuying Climate this month?
NerdWallet's Homebuying Climate Index puts a familiar weather label on how favorable conditions are for home buyers.
For August, our analysis puts the Climate Index at 53.2 out of 100, keeping the index in Partly Cloudy territory for the 49th straight month as most variables hold relatively steady.
Read more about the factors affecting this month's index to gauge how they might affect your homebuying plans.
Besides their stronger closing odds, cash purchases usually close faster because they don't have to go through mortgage underwriting, which takes weeks.
So strong is the preference for cash buyers that in 2025 sellers accepted a 9% discount on average for all-cash purchases compared with financed offers, according to property data provider Cotality. That’s up from just 4% in 2021.
Especially in a hot real estate market, cash talks, but not everyone can make an all-cash offer on a house. If you need to use a mortgage to buy a home, here are some strategies for competing against cash buyers.
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?
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.
For instance, the seller may be motivated to sell due to a job change, marriage, divorce or death. Knowing ahead of time the problem you can solve can put you a step or two ahead of the competition. See if your buyer’s agent can contact the listing agent to ascertain what would especially benefit the seller and the best way you could help.
Here are common items on home sellers' wish lists:
Hassle-free transaction with easy-to-work-with buyers
Highest sales price
Quick, on-time closing
Minimal buyer contingencies
Remaining in the home or a few days up to two months post-closing
Avoiding the hassles and costs of post-sale repairs
Be the path of least resistance
The home-buying process can get intense, and you may be at the stage where you want to tear your hair out or you’re anxious to get the process over and done with. However, don’t be demanding of the seller — such as requiring a response to your offer within two hours. The seller may take that as a red flag that you're difficult to work with.
This advice may be hard to accept if a previous seller leveraged your offer to squeeze more from a competing buyer. Still, overly pressuring a seller is not an effective negotiating posture.
You should also make sure your offer is clear, concise and favorable. Additionally, working with a well-known mortgage lender can go a long way to inspire seller confidence.
» MORE: How to make an offer on a house
Offer your highest price
Many cash buyers are investors who need to pay a low price to make a profit. Mortgaged buyers can sometimes outbid them.
Some buyers try to do this by inserting escalation clauses into their offers. With an escalation clause, a buyer makes an offer at a certain price, but the offer automatically increases if another buyer bids more — up to a cap. For example, a buyer may start with a $210,000 offer but have an escalation clause that states to beat rival offers by $2,000, up to a ceiling of $225,000.
But escalation clauses are cumbersome for sellers, especially if two or more buyers have them. So making your best-price offer right at the get-go rather than playing pricing games will often be the wiser strategy.
Close fast by waiving contingencies
When the seller wants a sure, fast transaction without lender glitches, you have to make your offer resemble an all-cash deal. This is where waiving contingencies comes into the picture.
What are contingencies?
A contingency is a clause in an offer that lets you back out of the deal if some condition isn't met. Most home purchase contracts include a few contingencies. When you waive a contingency, you give up the right to cancel your offer based on that condition — a strategy that can help a financed offer compete with cash bids.
A purchase contract can include several contingencies to protect you as a buyer. Two common ones are a financing contingency and an appraisal contingency.
Waiving the financing contingency
A financing contingency lets you wriggle out of the deal if you can't qualify for the mortgage. When you waive the financing contingency, you're betting that you'll qualify for a mortgage in the amount you'll need and signaling that you can close fast.
Get a mortgage preapproval before you make the offer and make sure you're buying within your means. Tell the loan officer that you will need to close the loan quickly and ask what the lender will need from you to accomplish that.
Waiving the appraisal contingency
An appraisal contingency lets you withdraw your offer if an appraiser says the home is worth less than what you offered to pay. In real-estate lingo, this is a "low appraisal" or an “appraisal gap.”
The appraiser works for the lender, not for you. You can't waive the appraisal — but you can waive the appraisal contingency.
However, it's risky to waive an appraisal contingency because it puts you on the hook to pay the difference between the appraised value and the purchase price. Here’s an example of a low appraisal scenario and how it impacts the buyer.
Stage of the deal | Amount | What it means |
|---|---|---|
Accepted offer price | $400,000 | Seller agrees to your purchase price |
Appraised home value | $390,000 | The appraiser determines the home is actually worth less than your offer |
Lender’s loan amount (assuming 90% financing) | $351,000 (based on $390,000) | Lender bases the loan amount on the appraised value, not your offer price |
Cash you’ll need to close on the home | $49,000 | You must cover the gap between the $351,000 loan and your $400,000 price offer |
In this scenario, the deal will go through if you have $49,000 on hand to bridge the difference between the $351,000 loan amount and the $400,000 purchase price. But if you don't have that much cash, the deal will fall apart and you may lose your deposit.
» MORE: How a home appraisal works
How to protect yourself from a low appraisal
One way to protect yourself is to set aside a larger down payment than the lender requires. Then if the appraisal is low, you can divert some of that money to cover the difference between the purchase price and appraised value.
Another strategy is to employ appraisal gap coverage. This clause says you'll buy the home up to a specified threshold. For example, you might be willing to make up a $5,000 difference between your offer price and a lower appraised value, but not a $10,000 difference.
Allow the seller to stay in the home after closing
Most sellers plan to buy another home, using the proceeds from the sale for a down payment. After selling their home, they sometimes ask to remain for a few days or weeks to find or move into their next property.
Buyers meet this need by offering a rent-back: a clause in the purchase contract that lets the seller stay in the home for a specified period. Lending rules typically cap the rent-back period at 60 days.
Offer to buy the house as-is
Some sellers don't want to pay for repairs or supervise the work. Their reluctance isn't always out of arrogance, empty pockets or laziness. The seller might be in a hurry to relocate, or the sale might be part of a divorce settlement and the ex-spouses can't agree on fixes.
You can fulfill the seller's needs by offering to buy the house as-is — but only after getting a professional home inspection. Be wary of skipping the home inspection, as it means you'll purchase a home without insight into its true condition.
Strive for understanding
By discovering what the seller wants and crafting your offer accordingly, you can sharpen your competitiveness against cash buyers (and financed buyers, too).
Be cautious about writing a personal letter to the sellers, explaining why they should choose you to buy their home. If you emphasize your similarities to the sellers, you may tempt them to violate fair housing laws.
If you write a letter, don't make it about you. Instead, describe how you can alter your offer to suit the seller. For example, your offer might not include a rent-back, but the letter can say that you're open to the idea.
Lastly, make sure everyone agrees on terminology. For example, sellers might ask for an "inspection waiver" when they really mean that they want you to buy as-is. So ask questions to make sure you and the seller are on the same page.
