Beating a cash buyer.

[Ryan Proffit]

I tried to pull the trigger on an mls property this week. It was day 1 on market and I went in with a full price offer and paying closing costs. I was beat out by a full price cash offer. They could close in 2 weeks, I had my offer set to close in 30. This got me thinking, how can I set myself up to be able to beat someone like this. Besides having all the cash of course. Is a private lender or a hard money lender a feasible way to get this done? My strategy going forward is going to be hand picking properties I want to buy and sending them hand written letters. But if an MLS deal pops up, I still want to be able to have a decent shot if I can somehow make my position stronger. Thanks.

Ryan

[Will Fraser]

Hi @Ryan Proffit.  I think the best tool for you could be an "escalation clause".  This is something that can be put into a contract on an addendum that allows the offer to escalate as needed to trump other offers up to a certain limit.  For example:

- Purchase price will be adjusted to be $2,000 higher than next-highest bona fide offer up to a total purchase price of $200,000 . . . (seller and/or seller's agent (if applicable) to provide offer to substantiate

- Purchase price will be $2,000 higher than appraisal value, should appraisal value not meet contract price.

If you or your agent (if applicable) can explain this to the listing agent upon offer submission and include it in the offer packet, if allows you to BEAT the other offer by a margin that you decide.  So, if the seller chose the faster-closing offer then they are deciding that $x is the value of those 2 weeks that the faster closer offered, which is a tougher answer to give as a seller.  

"You mean if I wait 2 more weeks I'll make $2,000 dollars more?"