Why a mortgage puts a home buyer at a disadvantage

For home buyers who need to finance their purchase using a mortgage, a cash buyer can be their worst enemy. That’s because when a buyer makes a cash offer, the seller knows it’s a solid deal — and that financing hiccups won’t delay a closing. Sometimes, that’s enough for the seller to accept a lower bid for a cash deal instead of a higher bid from a financing buyer.

It’s a scenario that is becoming more common with the number of cash buyers on the rise, swooping in for deals on low-priced properties. Yet while cash is king, there are some things financing buyers can do to better their chances of having an offer accepted.

Perhaps the most important tip: “The smartest thing they can do is make sure they talk to a competent mortgage banker … to preapprove them ahead of time,” said Mike Litzner, broker and owner of Century 21 American Homes, which has locations in Long Island, Queens, Nassau and Suffolk Counties.

Also, remember that the more cash you’re willing to put down, the more secure your job and the better your credit, the better off you will be in getting the seller to accept your bid, he said.

Source: Market Watch