First, it isn’t easy, but it isn’t entirely impossible either. You have to be prepared and know your limitations in the process of negotiation with a seller and a possible hidden competitor to your purchase.
First, make the best offer you can make right up front. The low ball offer with the mentality “They can always come up” will get you a quick “No Response” Many sellers today, won’t play the game, they will simply let your offer die, some will even go so far as not accepting any further offers from the low ball buyer. Therefore, make your best offer up front.
If your offer is higher than the cash offer (and cash buyers will often offer less using the quick close as leverage) then you stand a better chance of being considered.
Once you have an accepted offer it is harder for a cash buyer to “swoop” in. The seller might drag their feet on repair requests or even state they aren’t willing to repair anything. This is often the position a seller will take if a cash buyer appears on the scene willing to pay the same or more than the offer in progress. So even with an accepted contract there is still a chance a cash buyer might appear, but the odds go up in your favor as the property is no long “Active” once there is an accepted offer and many buyers don’t want to look at Active Capa or Active Contingent properties.
Make sure you have your financing in place.
We are finding that some out of state lenders could care less about the Arizona Residential Real Estate Contract. What does that have to do with anything? Well the Arizona Residential Real Estate Contract requires that all offers be accompanied with a Arizona Pre-Qualification Form. But many out of state lenders refuse to provide such a form to the buyers. They don’t care that it is required by the contract, it isn’t a form they are familiar with and don’t want to provide.
What do you do? Use a local lender that is familiar with the AZ contract and has no issues providing that form.
While we are on lenders, another good thing to ask your lender is about underwriting. The question? Is your underwriting dept. in Arizona? You wouldn’t believe how many out of state underwriters we’ve seen in the last year that have made closings almost impossible and we have heard of some deals dying as a result of underwriting demands and hold-ups.
Is that all?
I said it wasn’t easy. That’s pretty much it. There are a couple more things to consider that might keep you in the process.
First, when you make your offer, let the seller know something about your purpose and desire for the property. If you want to make it your home tell the seller why you want to buy this home and what you like about the property. For some sellers, this isn’t just a real estate transaction. They have emotional ties to there home. If so they want to know it is going to be well taken care of and even “loved”. If the cash buyer is a flipper that intends to do some updating and sell it, you might find the seller would rather the home go to someone who will live in it and make it their home.
Second, be considerate in the entire process. Being polite is a rare commodity anymore, and it doesn’t cost you a dime.
Thought this might interest you.
http://www.calculatedriskblog.com/2011/09/real-estate-agent-tracker-tool.html
This article is right on. As a Realtor in Austin, TX I can tell you I have had first hand experience where a buyer insisted on making a low ball offer only to make the seller mad enough to refuse to discuss any further negotiating. It is always best to make a good strong offer the first time.
Interesting. Yes, I would say it’s definitely a consideration for some sellers how they think the new potential owner will look after the property. Even when selling a property, if you’ve been there any length of time they’ll definitely be emotional attachment to it, so as you say an obvious flipper, even with cash, may be less likely to end up with the property, rather than a young family looking to make it their long term home.