Historically, all-cash buyers have represented only a small fraction of New York City buyers and been concentrated at the uppermost end of the market. However, a Q4 2023 report by appraiser Miller Samuel found that cash sales accounted for a whopping 67.9% of Manhattan sales, bringing it to a record-high market share that shows little sign of coming down. Buyers are eager to avoid fluctuating interest rates if they can; and sellers, boards, and sponsors appreciate them because this significantly speeds up the closing process.

While it may be hard to compete with those dropping $72.5 million on a townhouse, financed buyers should not be discouraged. This article drills down the ten things they can do to win bids in today’s market.

1. Offer a larger down payment
In a market dominated by all-cash buyers, it obviously makes sense to offer a larger down payment and, in turn, reduce your financing ratio. Even if you can't present an all-cash offer, offering above the minimum down payment is a move that will likely work in your favor.

2. Offer more than the asking price
In addition to putting down a larger deposit, it always helps to put in a highly competitive bid. The further above the asking price you can go, the better.

3. Be ready to move quickly
In most cases, potential buyers are either pre-qualified or pre-approved when they put in a bid. Since all-cash buyers also can close more quickly than financed buyers who require final approval from a lender, another way to gain a competitive edge in an all-cash market is to undergo underwriting before making an offer. While by no means typical, in the current market, an "underwritten preapproval" is highly recommended since, compared to regular preapprovals, in this case, an underwriter will review your entire file before you put in a bid, leaving only documents related to the property to be underwritten once you a bid is accepted.

4. Waive contingencies
Real estate contracts or purchase agreements contain dozens of buyer and seller contingencies. At their most basic, these are the mutually agreed-upon terms that guide the sale of a property. On the buyer side, common contingencies include the home sale contingency (a clause that ensures that the sale doesn't have to proceed if the buyer can't sell their current property) and the home inspection contingency (a clause that gives the buyer the right to back out of the deal if the home inspection reveals any major problems). While it is rarely wise to go into contract with no contingencies, in the current market, financed buyers (albeit only in consultation with their representative attorney) may want to consider waiving one or more common contingencies.

5. Be flexible on the closing date
Depending on the seller, an exceptionally short or exceptionally long closing date may be desirable. In the current market, financed buyers are also advised to be as flexible as possible about closing dates.

6. Include an appraisal guarantee clause
In most real estate contracts, buyers aren't obliged to go through with a purchase if the home appraisal reveals that the actual value of the home is significantly lower than the asking price. This clause is important because lenders typically won't finance the total amount of a requested home loan if the home is undervalued. In today's competitive all-cash market, more buyers are removing this standard appraisal clause and replacing it with an "appraisal guarantee clause"—essentially, a guarantee that the buyer will go through with the purchase, whatever value is determined during the appraisal process.

7. Include an escalation clause
Another clause being written into real estate contracts to help give financed buyers a competitive edge is the "escalation clause." In short, this clause guarantees that if the seller receives a higher offer, the buyer will raise their offer.

8. Make a personal appeal to the seller
Many first-time buyers are surprised to discover that buyers sometimes include a personal letter with a bid. While there is no guarantee a personal letter will work, in some cases, it can seal the deal. For example, someone who raised a family in their home may want to sell their home to a young couple with plans to repeat the cycle, and even be willing to make price concessions to ensure this happens. Since appealing to a seller on a personal level may or may not be a good idea, however, it is always best to ask for advice from your real estate agent before writing what is sometimes referred to as a homeowners' "love letter." More information about when and why to craft such a letter may be found here.

9. Focus on a coop purchase
Coops tend to be far less investor-friendly than condos. In most cases, this is due to the strict residency requirements found in coops, which typically require buyers to live in their units permanently or at least for two years before they can be rented. Although the coop market is also currently seeing a surge in all-cash buyers, compared to the condo market, it is still generally an easier place for financed buyers to get a foot in the door.

10. Agree to take the apartment not in “broom clean condition”
One of the most common clauses found in real estate contracts is the clause that stipulates that the seller must leave the property in “broom clean conditions.” Given that there is no clear definition of what “broom clean condition” means and many buyers still hire a professional to carry out a move-in clean, a final recommendation is to sweep out the broom clause. After all, in the current real estate market, a bit of dirt may be a small price to pay for a competitive edge.

Ultimately, the best way for financed buyers to gain a competitive edge in a market dominated by all-cash transactions is to find an experienced real estate agent and highly recommended real estate attorney. After all, in most cases, modifying, deleting, and adding atypical contingencies and clauses to a purchase agreement comes with at least some level of risk. Working with a team of professionals committed to protecting your best interest is essential.

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