How to Win Against All Cash Offers. As a buyer when you find that dream home after weeks or months of searching, you wonder how to win against all cash offers from the other buyers who also love your dream home. It can seem like an insurmountable problem – and maybe it is …. in some circumstances…. but not all.

Redfin Says Cash Offers Win 334% More Often

Homebuyers who offer cash are 334 percent more likely to win a bidding war than those who finance, according to a March Redfin report.  In addition, those who waived the financing contingency and conducted a pre-inspection were 31 and 25 percent more likely to win bidding wars, respectively, according to the Inman summary of the Redfin report. 

With historically tight inventory leading to a new high in bidding wars amid the spring homebuying season, it’s more important than ever for buyers to know what strategies will help them come out on top.

January 2022 is on record as the most competitive month recorded by Redfin, with 70 percent of homes handled by Redfin agents resulting in bidding wars. Last year saw 30 percent of homes sell above list price, while the most recent data from shows 43 percent of homes sold above list price in February 2022. 

7 Ways to Win Against All Cash Offers

1.Offer an Incentive

You can offer an incentive, such as offering to let the sellers stay in their home for a specified number of days — up to 60 — after the closing, so they have time to find and close on their new place and even paint it before moving in.  In the DC metro area you cannot let the seller beyond sixty days without creating a rental relationship which requires a lease.   Not only does going beyond 60 days raise the possibility of turning you into a landlord when you don’t want to be one but it also raises issues with your lender that your dream home is actually your dream investment property  In short, only offer up to 59 days to be on the safe side.

On a humorous note, someone wrote a letter to a seller offering to pay for the seller’s home inspection on their new home, pizzas and soda for the seller’s moving truck crew on moving day, a free Netflix subscription for a year and Barkbox for the family pet and many other incentives.

2. Write a Buyer Love Letter

You should consider including a “love letter” to the sellers.  A “love letter” is a letter describing what you and your family love about the sellers’ home and why you want to buy it.

Make sure your letter is about specific aspects of their home that are attractive — the lovely park views, the great layout with split bedrooms, the excellent location, etc.  and how you envision enjoying their home.  I had a client who wrote a love letter and talked about how he had grown up in Bethesda and wanted his two boys to have that same experience of biking and playing in the big back yard.  He also connected with the sellers on some paintings and collectibles that he saw in their home.  That personal letter (and strong financing) beat out an all cash offer for the same sale price.

Many listing agents will not allow their sellers to see the buyer love letter because there is the risk that another buyer who doesn’t win the competition will claim that the seller was influenced in an unfair way to chose your offer.  If you talk about raising your children in the sellers’ home and the losing buyer doesn’t have children, that rejected buyer may assert that the seller violated Fair Housing laws.  However, as a buyer agent, I think it is worth the risk.

3. Waive the Financing Contingency

Your offer should be non-contingent on financing — or anything else. It must be just short of absolutely guaranteed that the financing will come through. Not only the buyer but also the condo or coop (if applicable) must be qualified by the bank, and this should be stated in the bank’s letter of approval.

4. Show Proof of Funds

If you are financing some part of the purchase price and putting down the rest in cash, include a copy of your bank statement(s) with the account number blacked out.  If you are absolutely not comfortable showing that you have all that money in your account, ask your banker or private money manager to provide a letter saying that you have liquid assets in excess of the money needed for the downpayment and the closing costs.  Make sure that the author of  the letter is available to speak with the listing agent to confirm the assets.

5.Waive the Appraisal Contingency

If an early appraisal is not possible, you should be able to guarantee that if the bank’s appraised value is lower than the contract price, you can make up the difference.  Some buyers put a cap on the difference that they are willing to risk.  For example if the sale price is $500,000, they may be willing to cover the difference up to $50,000. As long as the appraisal comes in at $450,000 or higher, the buyer agrees that they will be the house.  If it comes in at $445,000, the seller will reduce the sale price to $495,000 and the buyer will pay the $50,000 difference.  This really puts the pressure on the listing agent to justify the sale price by bringing great comps to the appraiser and showing the improvements made to the home.

6. Co-op Board Approval

If you are buying a co-op (and there are indeed some in the DC metro area), find out what the Board review process entails.  (Our co-op reviews in the DC area do not tend to be as rigorous as in New York City.)

Make it clear that you are qualified to pass the co-op board. Consult with the managing agent to make sure the co-op has no unusual rules that you might not be aware of.  Don’t rely on the information that comes with the listing for pet policy, financial requirements, etc., but check these yourself with the managing agent. If the managing agent isn’t available, ask the seller’s broker to verify.

Then, include that information in your letter to the seller or ask your buyer agent to share that due diligence with the listing agent.

7. Include a BIG Earnest Money Deposit

Even though it is very difficult to hold on to the earnest money deposit if the buyer default, sellers like to see a big earnest money deposit.  To a seller it means that the buyer is serious and that the buyer has cash to perform under the contract.  In making an offer to purchase, be sure to include a big earnest money deposit, such as 5% or 10% of the sale price.   This money will be held by the title company and credited against the total funds you need for closing.  The money represented by the earnest money deposit is only given to the seller at closing as part of their net proceeds.



Do You Want to Talk to Lise?

I have been a realtor for over 33 years, specializing in helping buyers and sellers with all their Bethesda and Northwest Washington real estate needs. In addition to being a realtor with many years experience in all kinds of markets – the good, the bad and the ugly, I also am an attorney admitted to the bar in the District of Columbia.  While I no longer practice as such, I think that my years of experience as a lawyer also work to the advantage of my clients.

Kitchen at the CrestIn addition to a deep knowledge of the market and the ins and outs of the real estate transaction, I bring to my sellers a real commitment to technology in general and its absolute necessity in marketing properties.  My buyer clients also benefit from my technology skills because I am constantly searching all the hidden corners of the real estate market looking for that perfect home for them.

If you want an agent who always puts your interests first, then you should call me and set up a time for a cup of coffee, a little pastry and a lot of conversation.   Let me show you Howe Real Estate Should Be.  I am at 240-401-5577 or   Looking forward to talking with you!

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