Cash buyers always seem to have the upper hand, don’t they? The convenience of getting cold, hard cash directly in their pockets makes sellers favor those buyers who do not utilize financing to fuel their projects, but not every real estate investor has that privilege. Where cash-in-hand isn’t an option, strategy is. Being prepared to put together a solid financed offer on your next purchase is vital to compete with cash buyers, so how can you prepare your purchasing plan? Check out these best practices for competing with cash buyers:
Know the seller’s hot buttons – Being able to meet the seller where they stand is perhaps the most vital step in a successful real estate transaction, whether you’re a cash buyer or not. Oftentimes, sellers are seeking a quick close to the deal with immediate payout, but you may luck out and find a seller who is in no rush, allowing you more time to negotiate and settle on a deal. When a seller is looking for a quick close…
Start with your best offer – Knowing ahead of time what you can afford with financing is important, but offering your maximum purchasing price as your first offer helps buyers know you’re serious and that they won’t need to waste time going back and forth with you while negotiating a price. This strategy may feel risky in areas where the market future is uncertain, but just goes to show the importance of market research before determining if a project is a good fit for you.
The importance to a seller to know that your purchasing power is real is your best tool…
Get underwritten first – The importance to a seller to know that your purchasing power is real is your best tool to aid the competition against a cash buyer. This process not only ensures a seller that your words are backed up, but it helps you better understand your own purchasing power as well. While going through the process of being fully underwritten is more involved than just getting pre-qualified, it can make all the difference when competing for your next fix and flip project.
Looking to start the underwriting process? Start with our 30 second prequalification process! EMCAP Lending provides fast, private funding for commercial real estate investors and would love to help you secure your next project.
One preferable strategy when preparing for a counter offer is to initially offer your full financed price…
Be prepared to negotiate up – You remember that earlier tip that said “start with your highest offer”? It’s worth being prepared to bump up your offer when the seller gets back to you seeking a better price. One preferable strategy when preparing for a counter offer is to initially offer your full financed price, while saving existing fluid funds from your company to further increase your offer upon negotiations. Having even a small amount of fluid capital can help solidify any deal, especially when competing with a cash buyer.
The real estate industry is hot right now – fix and flippers are often competing against the imposing force of cash buyers. Connecting with the sellers, having the knowledge and resources necessary to compete – and beat – cash buyers is vital for the success of your investment futures. Have your private financing ready to go and do your best to communicate directly with the seller in order to garner the best results you can.
If you’re looking for private financing to bolster your efforts against cash buyers in your commercial real estate ventures, contact us at EMCAP Lending today. Our expert team of lenders work with you to help guarantee success in your fix and flip dreams.