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Buyers who offered an all-cash transaction were four times more likely to win in a competitive offer situation than those who didn’t in 2021, according to a report from Redfin. All-cash offers were found to be significantly more successful than other strategies, such as waiving the financing contingency or a pre-inspection.
Bidding wars have grown more common in today’s marketplace as buyers rush to compete for a limited stock of homes for sale. There were about four offers for every home sold in January, according to the REALTORS® Confidence Index Survey from January 2022.
According to Redfin’s analysis, the strategies that were the most effective in competitive offer situations, and their rate of improvement in transactions, were:
- All cash: 334%
- Waiving financing contingency: 31%
- Pre-inspection: 25%
- Waiving inspection contingency: No significant improvement
- Escalation clause: No significant improvement
But, while cash is king, buyers using financing can succeed. Amanda Peterson, a Fort Worth, Texas, real estate professional with Redfin, says she advises her buyers to be financially prepared before submitting an offer and to know how much they’re willing to spend over their offer for a house they truly want.
“We have detailed conversations about how much over asking price they’re willing to go and which contingencies they can waive,” Peterson says. “If a buyer has a low down payment or another scenario that doesn’t typically win a bidding war, I’ve had success explaining buyers’ unique situations to the listing agent and making it clear that their finances are reliable and the deal will close.”