How to Compete with Real Estate Investors

How to Compete with Real Estate Investors


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Real Estate InvestorsAlthough you may not have the healthy hand of cash most real estate investors have to play with, when it comes to investing in real estate, you can still not only hold your own against them, you can actually come out on top. Real estate investors are more focused on scoring their dream deal, not their dream home, and will often come in with all-cash low ball offers compared to other potential buyers. The trick to beating out these market moguls is to highlight your qualities as not only the future home buyer, but one that will take their job as future home owner seriously. Keep these pointers in mind next time you’re going up against the real estate investor competition.

Make a Strong Offer

The simplest way to win at the bidding war is to just offer more money. When you’re bidding against real estate investors, keep in mind they will likely make all cash offers. However, these are usually well below asking price. By coming in at asking price, or even slightly above, odds are you will out bid the cash competition.

Invest Your Earnest Money

“Earnest money” is most accurately described as “serious money”. Earnest money is the amount you put into escrow after signing the purchase agreement on a home, and it signals to the seller that you are serious about buying their home and aren’t likely to back out. Typically, buyers put between 1-3% of the homes purchase price down as earnest money, giving the seller the impression that they are serious about buying and have the funds required to do so. Most real estate investors who deal with primarily all cash transactions aren’t willing to tie up their funds as earnest money.

Get a Pre-Approval or Pre-Underwriting Letter

When you’re competing with cash buyers, being preapproved for a loan that provides you with sufficient funds to purchase a home is pretty much a requirement. You can obtain a pre-approval from your lender that evidences you have been approved to borrow whatever amount of money is required to finance the purchase of the home. You can even take your pre-approval letter to the next level by having your lender personalize it, providing insight regarding why you are the best option to choose as the potential buyers. Even better than the pre-approval letter is obtaining a pre-underwriting letter. A pre-underwriting level is almost on par with cash, and involves all the steps of the pre-approval process as well as the lender’s review of all documentation required to get the deal done. A pre-underwriting letter expedites what can be a rather lengthy mortgage process, allowing the seller a closing process with financing in about the same time as one dealing solely with cash.

Get Personal with the Seller

Trying this move will cost you nothing. Find out if the seller has any emotional ties to the house because you can quite often find that, in fact, they do. Sellers who raised their family in their home will often want to go with the buyer who plans on adding memories of their own that are just the same.

Be Flexible with the Seller’s Date

When a real estate investor is ready to move on a property, odds are they want it right away. As an individual buyer, however, you can afford to be a little more flexible. Offer to work within the seller’s timeline because the value of reducing stress is priceless!

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