You may have heard that in a competitive real estate market, you need to make an all-cash offer to purchase your dream home. Across the industry, the same refrain repeats incessantly: cash is king. It’s true that having cash on hand improves your chances of having your offer accepted. According to home selling data collected by Redfin, a competitive all-cash offer improves your likelihood of success by a whopping 97 percent. Further, cash offers are on the rise. According to the National Association of REALTORS, cash sales made up 23 percent of residential sales in October 2018, compared to 20 percent the prior year. If you’re buying in a competitive market like San Francisco or Denver, the truth is that you’ll likely be competing with all-cash buyers in your home search. 

But what if you don’t have all-cash, or simply prefer to mortgage your new home? There’s still hope for you! Here’s how you can compete with cash, even if you’re relying on home financing:

Understand Why Cash is King

First, it’s important to understand why cash rules the roost when it comes to home buying. One reason a cash offer tends to win a bidding war is because it’s faster and more certain. Financing a home with a mortgage is not always a predictable process. Surprises can — and do — come up, potentially risking your ability to close on the home. In fact, the number one problem for contracts with delayed settlement? Issues related to obtaining financing. Financing woes account for 37 percent of delays. Meanwhile, a cash offer indicates to a seller that the deal will close quickly and with more certainty.

A pre-approval or pre-qualification can certainly help your case, because it shows a seller you’re serious and ready to buy. The problem? All pre-qualifications and pre-approvals are not created equal. Each lender has their own process, and frankly, some of these processes are more thorough than others.

When a seller receives a pre-qualification or pre-approval letter from a lender, it signals that they might need to wait up to 40 to 60 days for the sale to close. That’s because the buyer’s financial data still needs to be verified and the loan needs to be underwritten. Simply put, these letters don’t carry much weight because they often rely on incomplete or self-reported information about credit scores and income. Pre-qualifications and pre-approvals are just the first steps of many in the mortgage approval process.

Work With a Lender That Underwrites Upfront

So, how can you get a leg up over the competition? Work with a lender that underwrites upfront. If you’re up against cash buyers, you’ll want your financial backing to be extra strong so you can stand out. That may mean removing uncertainties from the equation by showing the seller you have the finances to back your offer, and you’re ready to move quickly. Essentially a conditional approval that’s been fully underwritten carries a lot more weight than an unverified pre-qualification letter, and shows sellers you mean business and are a highly qualified buyer who’s ready to get to the closing table.

At Eave, we fully assess your finances within one business day. For exceptionally strong buyers, we offer a “High Certainty” program. That means we can support you in removing certain contingencies if it makes sense for you (a contingency is a clause in a real estate contract where certain conditions must be met — such as financing or home appraisal — before the sale can go through). Ultimately, this strengthens your offer and allows you to compete with cash. Even better? We guarantee to get you to the closing table in 21 days (often sooner!), which is a huge bonus in a cutthroat market. Offers backed by Eave Approval are more likely to be accepted, which means you can break through the competition and get into the home of your dreams.

Write a Letter to the Buyer

Another tip for standing out among cash buyers? Write a buyer’s letter to the sellers introducing yourself. Realtors say it’s best to keep these letters short and sweet, and compliment features that you love about the home. (Don’t mention what areas you want to remodel because that might insult the seller!) The idea here is that many people have emotional attachments to their homes, not to mention established friendships with their neighbors. With that in mind, sellers want to know that buyers will be good stewards—something that could set you apart from an investor who has plans to move renters in and out, or simply wants to gut renovate the entire home. A personalized letter shows you’ll take great care of the home and be a good neighbor. And that reassurance can go a long way with a seller who’s fielding multiple offers. 

With Eave’s ability to do a full financial underwrite of a borrower within one business day, contingency removal support, and competitive rates, you can make a cash-like offer.