How to Compete Against All-Cash Offers: “Cash-Like” Offers
If your cobuy group is hunting for a vacation home today, you’re competing against plenty of other buyers for the same property. We’re talking it’s a buying frenzy as in thousands of homes selling for at least $100,000 over the asking price, 48% of buyers’ offers coming in above the list price, and an average of five offers per home.
Today’s housing market likely has your cobuy group thinking, “how are we ever going to buy a house?”
Most of us have heard of all-cash offers, but not everyone has those funds available. That’s why we’re here to tell you about cash-like offers, which will make your cobuy group more competitive and give you an edge to win the bid.
How cash offers work for real estate
First, more on cash offers. An all-cash offer on a home is pretty straightforward. Your cobuy group finds a property you want and then submits an offer to purchase it outright without a mortgage loan.
Your group will still put down earnest money once you’re under contract as a deposit toward the amount you owe for the home. The rest of the money will typically be wire transferred to a title company just before closing day.
Before making an earnest money deposit, you will have to show ‘proof of funds’ — evidence you have enough liquid cash available to purchase the property.
How cash-like house offers work for real estate
Essentially, a cash-like offer uses speed to get a loan approved as quickly as within seven days—but it could happen as soon as one day.
Companies like the Joshua Sun Mortgage Team, powered by Blue Financial Group, complete a full-on approval before cobuyers even buy a home. Potential buyers often come to the table with a prequalification letter, but a full-on application and approval take it a step further. It goes through the entire process, including underwriting, to get your cobuy group approved upfront so that the offer is as good as cash. Your cobuy group will receive approval with no loan contingencies. Without contingencies, the sale is nearly immediate, and a quick closure allows for a quick transfer of money.
Cash-like offers differ from a traditional bank-backed loan from companies like Wells Fargo because those require 14 or 17-day loan contingencies.
Benefits of buying a house with a cash-like offer
Cash-like offers close faster and involve less hassle for buyers and sellers. The seller does not have to worry about your cobuy group being denied financing by the bank. The sellers also don’t have to worry about contingencies because they don’t want buyers to cancel—especially in this market, where a seller may get multiple offers. It can be difficult for the seller to put the house back on the market again if their chosen buyer is denied a mortgage loan. A cash-like offer removes these doubts.
How home sellers and realtors benefit from cash-like home offers
Sellers and their realtors know the offer won't fall through. They have assurance and peace of mind knowing that the offer will go through seamlessly, making a cash-like offer as good as a cash offer.
Joshua Sun stands behind his preapproval process with a $5,000 guarantee*. Joshua’s team will pay the seller $5,000 if they fail to close a certified home buyer or pay a $100 per diem penalty if they close after the contract date.
Cash-like offers in action
Joshua Sun Mortgage Team has plenty of real-life examples of how cash-like offers have won in the end—even when placed against higher-priced home offers. One of his clients, a couple, offered $450,000 on a home with $30,000 down (6.6%). The sellers received a much higher offer of $475,000 but the seller accepted the couple’s (lower) offer because they liked their terms better.
A second client of Joshua’s team also learned that while they were not the highest bid, the realtor felt Joshua’s team and the Blue Financial Group would “get it done smoothly.”
In today’s intense housing market, even if your group doesn’t have a traditional all-cash offer, you can still be ultra-competitive with a cash-like offer. For more information on cash-like offers and how they can help your cobuy group close on the second home or vacation home of your dreams, contact Blue Financial Group.
*Contact Joshua Sun Mortgage Team for full details and requirements on the $5,000 guarantee.
Whether you're buying, selling, refinancing, or building your dream home, you have a lot riding on your loan specialist. Since market conditions and mortgage programs change frequently, you need to work with a top professional who can give you quick and accurate financial advice. Joshua Sun Mortgage Team, powered by Blue Financial Group, has the knowledge and expertise to navigate the many financing options available. Learn more at teampraise.floify.com, or follow Joshua on Facebook or Instagram to receive helpful mortgage information.
Nestment, Inc. does not guarantee and is in no way responsible for the accuracy of information provided in this blog post. All information is provided “AS IS” and with all faults. Data presented here may not reflect all real estate activity in the market. While the information on this site is about legal and tax issues, it is not intended as legal or tax advice or as a substitute for the particularized advice of your own attorney and tax professional.
