How to Compete With Cash Offers Without Sacrificing Your Budget

When house hunting, money matters- especially in a hot market. But borrowers can still find ways to be the most attractive buyer without sacrificing their budget. Doing the right prep work in advance and highlighting other strengths can nudge you ahead, even if a competing buyer is ready to flash some cash.

What is a cash offer?

As the name suggests, a cash offer means no mortgage. The buyer can fully fund the home purchase with money ready in the bank, by selling their current home, or by selling stocks. Both the buyer and seller may have incentive to prefer this type of arrangement over a sale involving a typical mortgage agreement, but this isn’t always the case.
Cash buyers are more likely to be the first to back out because they know they can compete in the market, so they easily get buyer’s remorse if they’re worried they could be overpaying for a house. This is good news for financed buyers because it leads to fewer bids to compete with.

Cash offers are still prevalent, despite rising mortgage rates

Redfin reported 30 percent of homes are purchased with cash, an all-time high in over seven years. In a June 2022 survey, Zillow reported nearly 30% of recent buyers said they lost to an all-cash buyer at least once. According to the REALTORS® Confidence Index Survey, each home that sold in March received an average of nearly five offers- the same as in February and one year ago. Multi-offers and cash offers are still prevalent, despite rising mortgage rates, because any weakening buyer traffic is still far outpacing supply.

How to compete with cash buyers

Creating the smoothest experience you can for the seller will increase your chances of beating a cash-only offer:

Consider coming in over asking price

Many all-cash buyers are investors who plan to buy a home to upgrade and sell. To ensure a profit, those offering all-cash may not always offer the full listing price. While sellers are often willing to accept a slightly lower offer price for cash, you can effectively compete with all-cash offers like these by offering more than the listing price. Sellers might be willing to wait longer to close and accommodate the financing process in exchange for selling at a slightly higher price.

Get pre-approved for your mortgage

Getting pre-approved is one of the best ways to trim your closing deadlines since you’ll have the majority of the underwriting and paperwork done ahead of time. Pre-approval offers a more accurate statement of how much a lender will offer you for financing than a pre-qualification. Having a pre-approval doesn’t mean you’re legally bound to work with that lender, but the preliminary steps are taken care of, so you can close faster once your offer has been accepted. Cash buyers don’t have to wait for a mortgage agreement, which is attractive to sellers. By completing a pre-approval ahead of time, you’re on a similar playing field because you’ve already crossed some major items off your list.

Use a reputable lender

Partnering with the right lender can make your offer more attractive. Plenty of sellers worry about having the deal fall through at the last moment. We offer Home Buyer’s Edge , a full credit approval program that verifies every aspect of a buyer’s credit profile by an underwriter, giving the seller assurances that the deal is as good as done.

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How to Compete With Cash Offers Without Sacrificing Your Budget