How on earth can you compete with buyers who have cash offers?
According to the National Association of Realtors, 25% of homes that sold in the last year were cash deals. With all the out-of-state activity we’ve seen in the Chattanooga market, I suspect that number might be even higher. So what can buyers do to compete?
The trick is to make your offer as much of a cash offer as possible. If you don’t have enough equity in your home to sell it and use the cash to make a purchase, you’ll be forced to borrow.
One option may be to pay cash and get a loan later. How do you do that? First of all, if you have any equity in your home, you could take out a line of credit or borrow from a 401(k). Just be cautious if you do the latter, and be sure to pay it back quickly.
The ideal option is to sell your house first, which would not only give you the cash to buy the next home, but it would also eliminate the need to make your offer contingent on your current home’s sale. To do this, you’d have to find alternative housing arrangements until you close the purchase of your new home. Maybe you have a family member that could put you up, or perhaps you have a second or vacation home that you can stay in for a few months.
Alternatively, you could consider a rent-back, which is an arrangement where the buyer of your current home would allow you to stay in the property after closing for a certain amount of time. That would hopefully give you enough time to find and secure a new home for yourself. This can pose risks for the buyer, however; they need to be sure that you’ll vacate the property in time for them to move in, and they may not have the flexibility of waiting 30 to 60 days to occupy it. However, if they’re currently living on a lease, it may be possible for them to go on a month-to-month contract with their landlords until the rent-back period ends.
This process can be quite complicated, so if you have any questions or would like more information on how to put together the best possible offer, don’t hesitate to reach out to me. I’d love to discuss your options with you.