Why your ‘cash’ offer for a house might be a stinker

Last week, we explored the Love Letter, the emotional attempts to use a personal story to sway the sellers, and how they are now seen as ill-advised and should neither be submitted nor accepted as a part of an offer to buy a house.

So, without such a personal missive, what can buyers do to boost their offers and make theirs stand out against competing offers the sellers will receive? Here are a few ideas…

If you are in the enviable position of offering cash to buy a home in today’s market, it’s best to submit an offer with the evidence that you have the cash on hand. A 401k statement or investment portfolio of stocks and bonds might show financial capability, however, these funds are not considered liquid and could lead to concerns that changes in the market may impact your ability to come up with cash when it’s time to close the transaction.

A bank statement showing the cash on deposit in an account that clearly belongs to those parties making the offer is the best bet. If you have proof of more than enough money to buy the house at the price offered, that’s even better. Keep in mind, in this market, low-ball cash offers are not often seen as competitive with higher offers based on securing a home loan.

Speaking of home loans, if your offer is based on your ability to secure a loan, provide as much evidence that you will be approved as humanly possible. Your lender will work with you to identify all of the financial documents you will need to submit an application for the loan. Submit everything your lender asks for!

Most people see the loan paperwork as a task almost as onerous and distasteful as packing and moving, but both are necessary to get the job done.  And yes, a lender is going to need to run your credit.  Don’t sweat this step. Hopefully, you’ve been working on keeping your FICO score as high as possible in order to qualify for the lowest possible interest rate. So go flaunt your stuff!

When a lender runs your credit, it has a negligent impact on your score and is slightly different than the free one you can get online. So let them run it, and make sure your lender includes those awesome FICO scores on the pre-approval letter.

Regarding your pre-approval letter, make sure the lender includes the information regarding all of the documentation you’ve provided. Your offer will be less impressive if the lender has to say something to the effect of “this approval is subject to the submission and review of paystubs, bank statements and tax returns.” It is much stronger when your lender can put in writing that your pre-approval is “based on a complete and thorough review of paystubs, bank statements, and tax returns.”

Leslie Sargent Eskildsen is an agent with Realty One Group West. She can be reached at 949-678-3373 or leslie@leslieeskildsen.com.

 

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