You ask, we answer. Here is the latest question from a reader of our blog: “Having lost three deals to date, how can I make myself more qualified? How can I win the deal if I’m not an all-cash buyer?”
First, let’s review the pecking order of seller preferences when it comes to picking among buyers.
- Cash is king, so it’s always preferred that buyers pay 100% of the selling price in cash; it’s fast, it’s easy and it’s provides for the cleanest closing.
- Next comes the non-contingent offer, where there is financing involved but the actual purchase does not depend on it; whether or not the bank commits to the loan, and how much it commits to, will not affect the final sale.
- Last comes the financing contingent offer, whereby the deal depends on the bank to issue a commitment letter and ultimately fund the loan upon which the purchase is made.
You may think that this is the end of the conversation … not so fast. There are “hard” aspects to a seller accepting you as the buyer and “soft” aspects. The “hard” ones are named above. While there is a clear preferential order to them, they don’t tell the full story. There are “soft” aspects of the deal that can make all the difference to a seller choosing you versus someone else.
Think about it and put yourself in a seller’s shoes. What do you care about most? Your top concern as a seller is making sure that the buyer doesn’t back out. The last thing a seller wants is a deal to break down, only to have to relist the property and start from scratch with more showings, open houses and buyers.
There is a lot of signaling you can do to assure your seller that you’re serious and committed.
- Speed wins the day. Everything from the speed of your correspondence (how quickly you reply to the seller’s broker, lawyer or other team members), to your speed to sign the contract matters. It shows you’re on top of it and that you’re maintaining momentum to the finish line.
- Make yourself look low maintenance. If you have a few questions or demands, pool them together in one shot versus asking them one by one over the course of weeks. The latter creates a sense that you’re asking for yet one more thing and you’re dragging your feet. Also, make sure that the narrative presented by your broker about you, who you are, and what you’re about, underlines the low-headache aspect about how you operate.
- Yield where you can. If you only need a 60% LTV loan to make the deal happen, write the contract with that or a 70% contingency, versus an 80% LTV. (This blog post from Jerry Feeney explains the pros and cons of doing so.) If you are already well on your way with your bank and have a good relationship with them, shorten your commitment letter timeframe to 10-14 days from the time of signing, versus 30 days. You get the gist.
So, rest assured. Just because you’re not an all-cash buyer doesn’t mean that you can’t increase your chances of having your offer accepted.
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