As the saying goes, cash is king. When it comes to the real estate market, there is nothing more true than this. The market is surpassing historical highs and the euphoria of it all has people throwing around a lot of cash. In places like NYC, nearly 50% of offers that come through are all cash. This has the potential to squeeze people out of the market, as sellers enjoy knowing that they won't have to wait for the buyer to go through the mortgage process.
So where is all this cash coming from? Much of it is coming from investors. Investors from all over the world are pumping more money than ever into the US. Buying real estate is an important safeguard for maintaining wealth, as many of these people may live in places with government and financial instability. Additionally, the appreciation being offered on NYC real estate has never been greater.
Although it may be stressful to know that you may potentially be competing with all cash, have no fear, because there are some clever tips that will help level the playing field.
Tip #1 - Come Pre-Qualified
Come to the bidding party prepared with pre-qualification. This will let the seller know that you are prepared to make the deal happen. You might not have all the cash on hand, but you're actively working with a bank that will provide the financing you need to close.
Tip #2 - Be Decisive
Find an apartment that meets many of your must-haves? Be decisive, and put in an offer. Let your broker know that this is the one you want, and have them communicate this to the seller's broker. Of course, this may reduce some of your leverage for the price you offered, but it also allows the seller to know that you are ready to deal. Cash buyers may exist, but they may not be as serious as you.
Tip #3 - Bid Above Asking Price
Cash buyers often bid below ask. Why? Because they have all cash and realize that buyers who need to finance pose a risk for the seller. By bidding slightly above ask, you might put yourself in a position to just simply outbid all cash buyers enough that the seller wouldn't even consider going with them.
Tip #4 - Be Flexible
Give the seller the option to close when they need to, even if it's a few months out. Does the seller have any other contingencies or fees they want you to take care of? Consider accepting these terms to make the deal go through.
Have you had success outbidding a cash buyer? Tell us your story, and we'll feature you on our blog.