How To Compete With A Cash Buyer For A Home

Competing with cash buyers for homes
When competing against cash buyers for homes, certain strategies may be fruitful.

South Florida continues to see increased home buyer demand, particularly from out-of-state buyers moving to The Sunshine State from more expensive markets. In addition, the housing inventory continues to be extremely tight. For perspective, the benchmark for a balanced market (favoring neither buyer nor seller) is 5.5 months of inventory. Anything higher is traditionally a buyer’s market, and anything lower is a seller’s market. As of April, the total months supply of single-family homes for sale in Palm Beach County was 1.4 months. As for condos and townhouses, this figure was even lower at 1.1 months. Needless to say, the current market still heavily favors sellers.

Another challenge for many home buyers seeking to purchase a home through financing is the high number of cash buyers in the market. For many of these conventional buyers, competing against cash buyers has been next to impossible. Below we discuss some strategies that may be implemented to be able to compete in this market.

Home buying strategies

  • Research the local market: As with any real estate purchase, it is critical to be well educated on the local market. For example, buyers must determine what the inventory of homes for sale is like as compared to the demand. In addition, what do most buyers and sellers expect in the local market? As always, recently closed sales will give you a better picture of the local market.
  • Obtain a pre-approval letter from your lender that reflects the maximum amount that you are qualified for: Since you are financing, it is important to demonstrate to a seller that you are a minimal risk. This pre-approval letter may show an amount above what your offer amount would be. It is important to stress that this should be a pre-approval letter and not a pre-qualification letter.
  • Offer a good amount over the asking price (as warranted): With many homes selling for above asking price, it is important to not waste time with low-ball or below asking price offers. Your real estate agent should know what kind of premium comparable homes are selling for in the local market. For example, perhaps similar homes are selling for a 10% premium in your local market.
  • Consider implementing an escalation clause: Escalation clauses allow you to go over other offers by a set amount of money. In addition, you will be able to set a cap on the amount of money that you are willing to pay for the property. For example, if a home is listed for $600,000, you might consider offering $615,000 with an escalation clause that says you’ll pay $5000 over the highest offer not to exceed $635,000. In the event that another offer of $620,000 is received, you would need to pay $625,000 and therefore not have to reach your maximum limit of $635,000.
  • Be flexible with the seller’s desired closing date: Given the tight inventory of homes for sale, it is possible that the seller may also be struggling with finding a new home. By catering to the seller’s schedule, your offer may become the most appealing.
  • Let the seller rent back the house: As mentioned above, offering some flexibility to the seller can go a long ways. In the event that the seller’s time table is somewhat uncertain, you may consider offering that the home may be rented back from you while the seller identifies and closes on their subsequent home. Of course, this may or may not be feasible for some buyers.


If you have attempted to buy a home during the past two years, it is quite likely that you have either been outbid or simply not had your offer accepted due to a competing cash buyer. The aforementioned strategies may help you differentiate your offer from some cash buyers. While another tactic may include waiving your inspection of the property, this is generally not advisable. However, shortening the inspection period may also be more appealing to the seller. As always, it is critical to have a local and knowledgeable real estate agent to guide you through this process. Do you have questions or need assistance? Contact Natasha at Live South Florida Realty, Inc. today!

At Live South Florida Realty, Inc. we have assisted many clients with their real estate needs. Are you looking to buy or sell a property in South Florida? Now more than ever, it is critical to have a qualified real estate team and the proper search tools behind you. Live South Florida Realty, Inc., has been a leader in the South Florida market for many years. Let our team of professionals assist you with buying or selling your piece of paradise today! In addition, our recently launched “Florida Home Search” app is now available on the Apple App Store and Google Play Store. With real-time MLS feeds, this app lets you set your own alerts to notify you as soon as a property meeting your needs hits the market. Furthermore, it will also let you know of recent closed sales in your area so that you may be even more educated on the market. Be sure to download this app for your smartphone or tablet today!

By natasha moore

REALTOR® with Live South Florida Realty, Inc.

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