How can I complete with cash buyers?

Asked by purplefan, Pompano Beach, FL Wed May 29, 2013

The last 2 bids we lost were to cash buyers, the first said cash only in the brokers remarks in the listing however we didn't find this out from our realtor until we were ready put an offer on the place. The second we bid full asking price but they got apparently 4 cash offers. We are putting 20% down and putting a large deposit. Is there anything else I can do? Why do sellers prefer a cash offer?

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Ron Thomas, Agent, Fresno, CA
Wed May 29, 2013
when a Listing says; "cash only" it is probable that it would not qualify for a loan,
You never had a chance on that one.

do not be intimidated by CASH; when all the dust settles, everybody has their money.
the leverage that cash affords is a stronger offer, less likely to fail, and maybe a quicker escrow.
But, if you offer Market Value, and the CASH offer is for 10% less; you will get it.
The problem right now is multiple offers on "affordable" houses; you will just have to persevere.
1 vote
Yanoska Diaz, Agent, Miami, FL
Sun Sep 22, 2013
You cannot, unless you are willing to pay much more than what the property is worth and subsequently cure the cost of the appraised value. South Florida is flooded with cash investors, the myth of the cash investor looking for a bargain is a thing of the past, in today's market cash investors are paying top dollar to acquire an asset.
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Barkin Gilman…, Agent, Fort Lauderdale, FL
Fri Aug 30, 2013
Unfortunately, no. Consult with your realtor on other concessions during closing that will make it faster, and you could try offering those as well. Best of luck.
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My NC Homes…, Agent, Chapel Hill, NC
Wed Jul 31, 2013
Sellers prefer cash buyers because they can close more quickly and there's no question of whether the loan will be approved or not.

To begin with you need to get a full pre-approval letter from your lender and you need to insist that it clearly states the following:

Buyers are preapproved to purchase "Address". This is based on a full tri-merged credit report, and verification of income and assets. This approval is subject only to a satisfactory appraisal, an insurance binder and final underwriting review." this celarly indicates to a seller and their agent that you really are approved for your mortgage; and allows you to shorten the length of time you tie up a home under diligence.

You can offer slightly more than the seller is asking. You can also find out if they have a preferred close date and work with them. Consider offering to accept the first couple of thousand in home inspection repairs without asking for anything from the seller or if you're confident enough you could make an "As-Is" offer though I'd be very careful about doing this.

It's also important to understand that money isn't always the prime motivator for every seller (yes I know this is hard to believe) but trust me it's true. Some sellers really care more about who buys their property than the actual dollar amount, and I've occasionally prompted buyers to write a handwritten note that I submit along with the offer explaining why they love the home and how they can see themselves enjoying it for years to come with their family. Trust me while it may sound a little cheesy; it's worked on more than one occasion when my buyers and i were in competitive bidding situations. I've actually had the listing agent tell me that my buyers letter was what got them the house and that the seller actually took our offer over another that offered a slightly higher price.

Lastly consider an acceleration clause, where you offer to beat any bonafide offer by $1000+/- up to a maximum of $$$$. A good buyer broker or attorney can help you with this

I wish you all the best and know that you'll soon get a great home.
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Susan J Penn,…, Agent, Weston, FL
Wed Jul 31, 2013
In South Florida approximately 65% of the sales are CASH! What can a buyer do in your situation, try offering over the asking price. Otherwise, find new sale homes. I have been taking my buyers to new construction homes.

Susan Penn, PA EWM Realtor
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Olga Rubin, , Miami Beach, FL
Tue Jul 30, 2013
Sellers prefer cash offers for a number of reasons, ease of closing is a common reason. I recommend you have a frank discussion with your realtor, as it sounds that they may not be aggressively pursuing your interests. The market here is fierce with limited inventory, as I am sure you are aware. Best of luck.
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Stephen McRo…, Mortgage Broker Or Lender, Tampa, FL
Thu May 30, 2013

So basically everything in my first response below was accurate wasn't it? I know for a fact, as a Florida Mortgage Broker and Investor, I know how best to buy real estate, especially in this 2013 real estate market and even more so when a Mortgage Loan is required.

I have to deal with realtors all over the state and the ones who are not my realtor partners can be very frustrating to work with at times with their antiquate mindset and refusal to do things differently than how they've done them since1980 have been taught. This is why I refer borrowers, who are not referred to me by realtors, to my realtor partners as they know how best to make and get offers accepted.

For example, you'd think that this below would be common knowledge, but you'd be surprised at how few can grasp or are willing to help buyers in these here…

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purplefan, Home Buyer, Pompano Beach, FL
Thu May 30, 2013
The advice to listen to the real estate professional is not terribly helpful. I am sure there are very qualified real estate professionals out there, but I have no idea how to find them. I am on realtor number 2 and I have always listened to them when structuring the offers. In one case I specifically asked the realtor to put in items I know probably would have helped the offer (i.e. more money in escrow, she told me 5K was enough. I also suggested a flexible closing date since I specifically knew the sellers hadn't found a place to go yet and I am not sure why, probably out of greed and wanting to cash her commission check sooner she refused to put that in there )

I have given up on having my real estate actually help me so I am trying to find one who will at least listen to the research I am doing on my own.

The idea of writing a cover letter is a good one, I will be doing that for the next offer we decide to make.

I am working with a credit union as they seem to give the best rates, but they won't do the commitment letter, any ideas on how to get that?
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Annette Law…, Agent, Palm Harbor, FL
Thu May 30, 2013
Have a meet up with your real estate professional.
Ask, "What is the most important factor a seller considers when evaluating a purchase offer?"
The response will be, "The ASSURANCE OF CLOSING."
Cash buyers are able to circumvent many of the obstacles that banks. mortgage brokers. insurance companies, appraisers, and inspectors throw across the path to success.
Since you do have 20% down, you also have flexibiliy in structuring your purchase offer.
Consult with your real estate professional and start thinking of ways to remove these obstacles. If you don't. you will be a longterm, home buying spectator.
You have options. More than you think.
But you must stop second guessing the professional you hired and start making really strong and innovative purchase offers. Do not underestimate the power of a good cover letter. And, if your financing bears the name of a 'Too Big to Care' bank, .... I can only ask,,,"What are you thinking?"
Listen to the real estate professional you hired.

Best of success to you,
Annette Lawrence, Broker/Associate
Remax Realtec Group
Palm Harbor, Fl
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Stephen McRo…, Mortgage Broker Or Lender, Tampa, FL
Thu May 30, 2013
----Let me guess, and you tell me if I'm wrong or right

1. You have not made full application, meaning submitting all your documentation to a lender in order to get a Bona Fide Loan Commitment Letter yet. At best, you have in your possession, which is viewed by realtors as worthless, a "pre-qualification or pre-approval" letter.---- Am I right so far?

2. You have not been asked to actually transfer the 20% down to a Title Company's or Attorney's Escrow account to receive a Bona Fide Escrow Letter . ----Am I still on a roll here?

3. Not one offer has your realtor submitted both a Bona Fide Loan Commitment Letter and Escrow Letter. ---- Yes, no?

I'll bet the majority of the offers were 1/2 @**ed made either done as a "Verbal Offer" or if a purchase offer was written up, it was sent in with $5,000 or less written in the deposit line and nothing else! -----Am I right?

You can't go into this 2013 Florida real estate battle zone up against M1 Abrams Tanks riding in on a three-legged 40 yr old donkey, swinging a sharpened popsicle stick and shooing pebbles from a slingshot!!

If you want to be able to compete with Cash Buyers, you need to make yourself the next best thing to a cash buyer and do this the right way going into negotiations from a position of strength!!

Contact me and I'll give you a 20 minute lesson on how to get your offer accepted.

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Abu Musa, Agent, New York, NY
Wed May 29, 2013
Cash offer is always attractive. You may talk to your agent to find the way to make your offer more attractive.
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Susan J Penn,…, Agent, Weston, FL
Wed May 29, 2013
Why do Sellers love cash buyers? They can close, and they can close in less than 30 days. We are in South Florida where we have more cash buyers than we can believe. My advice is just keep trying. .

Susan Penn, PA, SFR
Esslinger-Wooten-Maxwell Inc
2000 Main Street
Weston, FL 33326
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Jesus M. Fer…, Agent, Palm Coast, FL
Wed May 29, 2013
The best thing you an do in your situation is to get a D.U. from your bank. The D.U. process is more comprehensive than a regular pre-qualification or approval letter findings . It tells sellers that you have been truly approved for a loan and there are no skeletons in the closed, which may come out later and kill the transaction.

Why do sellers prefer a cash offer? The main reason is the appraisal contingency tied to your loan application and approval. Cash buyers do not need a banker's approval, they are free to pay as much as they wish without relying on an appraisal.

Your best bet is to look for a short sale that has been on the market for a few weeks with no takers. Cash buyers usually stay away from these, because they may take several months to close.

A word of advise on short sales. Your agent must qualify the selling agent and the motivation of the selller. Failing to do so will result in a failed attempt. Often, some short sellers are distraught and in denial of their financial situation and want to postpone foreclosure by executing a sales contract, which they can present to the judge. Make sure your agent asks the right questions, otherwise you will waste precious time.

Lastly, don't give up! You owe it to your family and your financial future to purchase while interest rates are low.

Best wishes,

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purplefan, Home Buyer, Pompano Beach, FL
Wed May 29, 2013
Getting a mortgage approval on a specific property seems unrealistic as in my experience the places we want to buy go quickly this last house was onlly on the market 2 business days. Also, I am preapproved for much more than the properties we are looking at so I would think that would help to convince them, that we willo get approved for the loan.
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I like what Jesus Fernandez said. Qualify the seller's agent on any short sale. Even the bank on a short sale will play games. I think its just part of the process. If you don't like what your agent is doing intervue several others and get an agent that will work hard to get what you need. There are many out there. And don't use a part time agent who does real estate "on the side" get one who is experienced and who relies on realestate sales to pay their own bills. They will be more motivated.
Flag Thu Jun 6, 2013
If you're already preapproved for a loan... you can ask your lender to run the mortgage application, and be prepared to give you a quick "committment", once you have an address.

Granted, it's a little outside the box, but that's what's called for in your circumstances.
Flag Fri May 31, 2013
I think you misunderstood. You and not the property must get "approved" for the loan. Once you have beed approved and you have an executed contract, the only thing left is for the property to appraise and pass inspection.

Feel free to call me. 786-553-7530
Flag Wed May 29, 2013
Susie Kay, Agent, Dallas, TX
Wed May 29, 2013
Cash offer means less risk for the seller for the house not to close since there's no loan to be approved or appraiser involved. I would suggest to keep on trying, I know it's frustrating but if you give the seller a good offer (i.e. full price) and a good term (i.e., a little flexible on move out date for the seller) while the cash offer gives them less than full price and wants seller to move out in 2 weeks the seller may just go with your offer.

I hope that helps, but you should always consult your agent when you have any questions. She is your source of knowledge and advisor.

Susie Kay, Realtor®
United Real Estate
III Lincoln Centre, 5430 LBJ Freeway #280
Dallas, TX 78240

Servicing your real estate need is my priority!
0 votes
Alan May, Agent, Evanston, IL
Wed May 29, 2013
Sellers prefer cash because it removes one fairly important obstacle from the transaction. Even though you're putting 20% down, you still have to wait 30 days (or so) to get a mortgage commitment from your lender. A preapproval is nice, but it doesn't mean the lender is ready to hand over the money.

So with a true cash deal, the seller doesn't have to wait extra time to see if you're really going to get your loan. Often that also means they don't have to worry about whether the property will appraise for the purchase value either.

In the end, as you know, it's all cash at the closing.. but it's this hurdle that they're avoiding. A cash offer, even if it's a little below the next offer, in the seller's perspective, could be worth accepting over an offer than requires a loan and appraisal.

You could ask your lender to see if they'd be willing to give you a mortgage "commitment" on a specific property... that might give the seller a better comfort level. Not all lenders are willing (or able) to do that.
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, ,
Wed May 29, 2013
Cash offers are more attractive because they can happen quickly and there are no lending or underwriting hang ups. Since the lending market has changed, underwriting has become a bit unpredictable and time consuming.

You can compete with the cash buyer usually because the cash buyer comes in a little lower and if the seller is patient, it usually works out to their advantage financially.

I am a boutique mortgage lender and know very well whether you will be approved or not. I will not waste your time or mine with trying to get something approved only to find out later that it can not be done. You would be surprised what has held loans back from closing lately.

Knowing these things and working directly with lenders for 20 years gives me an advantage and the confidence to let the realtor and buyer tell the seller that we will close when expected.

Most pre approvals are not worth the paper they are written on. I basically the underwrite the file prior to issuing any pre approval. I will tell you at that point what, if any , challenges you will run into and advise how to work around these issues.

I will always be glad to discuss any situation with you or your realtor. I am always available.

Andrew Kashella
The Lending Team
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