Many times over the past year, I have learned that the winning offer for a home was an all-cash offer. Fortunately, some of those winning offers were made by buyers I had the good fortune to represent. After another one of my buyers’ all-cash offers was recently accepted in a multiple-offer scenario, I started wondering, “How can more of my buyers make all-cash offers even though they do not have all of that cash available?” In this incredibly competitive Silicon Valley housing market where it is common for a home to receive 10-20 offers, buyers’ agents are always looking for ways to help make their buyers’ offers as attractive and compelling as possible to sellers. Ideally, for each of my buyers, I would love to submit a competitive, all-cash, quick-close offer with a few other terms and conditions that are very attractive to sellers and typically not utilized by most agents. I was recently told by a listing agent that his sellers chose to accept my buyers’ offer over a significantly higher offer without countering on price due primarily to the strength of our all-cash offer with a very quick close.
So, how can buyers increase the odds of their offer being accepted by submitting an all-cash offer when they do not have all of the cash available and/or are planning to carry a mortgage on the home? Believe it or not, there are a few options worth considering.
Some lenders offer programs that provide all-cash home buyers the opportunity to finance their new home with a mortgage within 90 days after closing escrow with the same interest rate and terms as if the mortgage had been used to purchase the home. For buyers with the cash available, this provides an excellent opportunity for them to increase the odds of their offer being accepted without needing to tie their cash up for more than a month or so.
This is exactly how some recent buyers of mine were able to purchase two homes for their extended family within walking distance of each other. They purchased the first, more expensive home with cash, immediately took out a mortgage on that home, deposited the mortgage proceeds in their bank account and then purchased the second, smaller home utilizing that cash. Even though both homes received multiple offers, my buyers’ offers were accepted primarily because they were compelling, all-cash, quick-close offers that provided the seller with complete confidence in our ability to perform.
For home buyers who do not have the cash available and are eager to submit a compelling, all-cash, quick-close offer, borrowing the money for the month or so it will take to fund the mortgage may be an option worth exploring. You may be asking: “But where can a home buyer go to borrow this money?” A few possible options include:
- Borrow from someone, such as a parent or other family member, who has the cash available
- Borrow from Home Equity Line of Credit, if moving up from a home with significant equity
- Borrow against equities in an investment account (on margin)
- A combination of some, or all, of the above
In this extremely competitive housing market, submitting the strongest and most compelling offer possible is a necessity for home buyers wishing to prevail in multiple-offer scenarios. An all-cash offer, written with the right terms and conditions, can provide the edge many home buyers are seeking. Creating a successful strategy up front and connecting with the right lender are just two of the many critical steps that DeLeon Buyer Specialists can help home buyers in preparing that winning all-cash offer.