Many of today’s home buyers with the means to do so will use cash offers to attract sellers who want to avoid financing issues and enjoy expedited closings. If the terms are the same for an all cash offer vs financing, the seller will likely take the all cash offer for the house because it simplifies the process. However, you may be able to tempt the seller away from an all cash offer on the home by using more favorable terms. If you don’t have the cash on hand to make such an offer yourself, here’s how you could compete in a seller’s market.
Offer More Money
In many cases, cash buyers will make an offer that is significantly lower than the seller’s asking price, hoping that a promise of quick cash will seal the deal. One of the best ways to compete with a lowball cash offer is by simply offering more money.
Waiving contingencies can be an attractive way to make things easier on the seller, but doing so can also be risky. A real estate lawyer can help you determine whether it’s a good idea to waive your:
- Financing contingency, which allows you to back out of the purchase if your mortgage application is not approved or your financing otherwise falls through
- Inspection contingency, which allows you to have the home inspected before you buy it
- Sale contingency, which allows you to avoid going through with the home purchase until you have sold your own home.
- Appraisal contingency, which allows you to back out of the purchase or renegotiate if the appraisal value is lower than expected
Offer an Appraisal Gap Guarantee
Many home appraisals come in at a lower value than sellers expect. As a result, many sellers are understandably concerned about buyers backing out of deals after appraisals.
You can make your offer more attractive to a seller by including an appraisal gap guarantee. This guarantee tells the seller you won’t back out of the deal due to a low appraisal and you are willing to cover any differences between your bid and the house’s appraised value. This may mean paying more money than you initially put down with your lender.
Close When the Seller Wants to Close
Buying or selling a home can be stressful, but a painless transition between one home and the next can make the process a lot easier. If your seller needs extra time in the house before they can relocate, you can make your offer more attractive by allowing them to close when they want to.
One way to do this is to keep your current closing schedule but allow the seller to “rent” the home from you at a prorated amount until they can move. This flexibility may help you beat out an all cash deal for real estate.
Become a Cash Buyer Yourself
If you have some cash but not enough to purchase the home outright, you could also offer a larger down payment and decrease your financing amount to 50 or 60 percent. A lower financed amount can ease the seller’s stress about your ability to secure adequate financing.
How Our Manhattan Real Estate Attorneys Can Help
If you are in the process of purchasing real estate in Manhattan and would like to learn more about how to compete with all cash offers, contact an experienced Manhattan real estate attorney at Chaves Perlowitz Luftig LLP for assistance. We know this market and help buyers like you find the right property at the right price. Call us or reach out to us online today.
Chaves Perlowitz Luftig LLP is one of the most highly regarded real estate and estate planning firms in New York City. Our team of top-rated real estate attorneys and estate planning lawyers have extensive knowledge, resources, and connections to help you achieve your goals and plan for the future.