Competing With Cash Offers: Fund Access, Pre-Approval, Timelines
In part one of this two-part blog series, we went over some basics on competing with many of the cash-only offers you might see on the real estate market. These offers have become much more common in the past year, leaving those who are not offering cash looking for ways to level the playing field.
At Fox Financial, we're here to help with this and many related factors as we assist clients with several forms of real estate investment, including passive real estate, rental properties and more. While part one of our series went over trying to understand broad seller motivations and meet their needs, today's part two will dig into several specific strategies that will often be taken by real estate investors to compete against cash offers.
Make Your Funds Easy to Access
Cash offers are appealing to sellers because there is no risk that buyers will not be able to come up with the funds for the purchase at closing. You may be trying to compete against cash, but chances are you do not carry millions of dollars on hand and.
If necessary, designate a specific account just for down payment and other expenses as part of this purchase. Ensure you have enough liquid assets present that you can move funds around if you need to access them.
Get Pre-Approved Ahead of Time
You could be the most perfect buyer ever in several areas, but if you have no pre-approval letter from your lender already on file with your agent, you will likely elicit many questions and concerns from prospective sellers. In many cases, lack of pre-approval will cause them to favor cash buyers.
Make sure that you have had your finances in order for some time before you even begin looking at properties. This will allow you to make offers on properties without having to waste time gathering your financial information.
Limit Inspections and Appraisal Timelines
While this is not always possible with older homes or properties that have more complex issues, there are some ways to shorten the inspection and appraisal periods for a home.
Appraisers can typically inspect a property within two to three days after accepting the job, and will need anywhere from one to two weeks to produce an appraisal report. Be sure to factor this in.
In addition, take steps now to ensure that you are able to hire an inspector who can complete the job quickly and produce a thorough inspection report within one week of accepting the work. The more thorough, detailed and objective these reports are, the more leverage and negotiating power you will have -- but doing this in a quick way will impress many sellers.
For more on competing with cash buyers on the real estate investment market, or to learn about any of our real estate investment services, speak to the staff at Fox Financial today.