How Can You Beat a Cash Buyer?

Cash buyers are flooding the real estate market in record numbers to take advantage of bargain housing prices. But these buyers may put consumers who need financing at a disadvantage. 

Sellers often prefer cash deals because it can mean faster closings and transactions that are less likely to fall through. Some sellers are even accepting lower offers because they are from cash buyers than higher offers from a financing buyer just because they view it as a more solid deal that will be quicker to the closing table. 

So how can your financed buyers compete? Experts offer a few tips.

Get pre-approved or pre-qualified for a mortgage. “The smartest thing they can do is make sure they talk to a competent mortgage banker … to pre-approve them ahead of time,” says Mike Litzner, broker and owner of Century 21 American Homes in New York.

Show you’re in good standing. You'll improve your chances of getting a seller to accept your bid by having more cash that you’re willing to put down, showing you have a stable job, and good credit, Litzner says. Also, a well-prepared, typed-out contract that includes a cover page summary of the contract deals is another way to show you’re a serious buyer, says Dan Quinn, a real estate professional with Prudential Carruthers REALTORS® in the Silver Spring area of Maryland.

Offer more earnest money. Offering a high down payment and high deposit can also help improve your chances of beating out a cash bidder, Quinn says. 

Act quickly. “What I found out is with these cash buyers, they act quickly,” Quinn says. “To compete, you have to act quickly. A lot of times, these are investors and they have a relationship with these listing agents.” Buyers' agents should develop rapport with the listing agents too, Quinn says. 

Realize, however, that while some sellers may be highly motivated to accept a cash buyers offer, even if it’s lower than others, sellers with more equity in their homes may be less wooed by lowball cash offers, says Donne Knudsen, a mortgage loan originator with Cobalt Financial Corp. in Los Angeles. Instead, sellers who still have equity in their homes likely will be more motivated by the best and highest offer, since closing quickly may not be as critical to them, she says. 


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