You’ve been house hunting for months, and you’ve finally found your dream home. You love the layout, the amenities, and the neighborhood. The house is also listed at a reasonable price. You really can’t find any downsides to this property, and you can really visualize yourself living there. So, you’ve decided to make an offer on the home.
However, you have plenty of company. In many cities and towns, it’s definitely a seller’s market. This means the marketplace is overflowing with buyers, and there isn’t enough home inventory to accommodate them all. Each newly listed home quickly receives multiple offers, some of which are above the asking price.
To further complicate the issue, real estate investors are jumping into many fast-growing regional markets. Sometimes, the investors are buying the homes sight-unseen with the intention of flipping or renting them. By snapping up available houses at way-above-asking price, the investors leave even fewer homes for individual buyers to purchase.
Fortunately, there are several ways to make your offer stand out and increase your chances of getting the home. These five useful tips apply to any geographic market and any price point.
Submit a Super-Clean Offer
Regardless of the property specifics, realize that each seller wants to complete their home sale as quickly as possible. They want a satisfactory offer, and they want to move through the closing process with a minimum of delays.
To accomplish that goal, the seller will prioritize offers with no contingencies attached. Stated another way, don’t make your offer contingent on selling another home. In a similar vein, don’t tie your offer to the liquidation of other items you have for sale.
If you are expecting money from a settlement or other external source, know that the process moves at its own pace. Your repeated phone calls and emails aren’t likely to make it go any faster.
Look for Errors or Omissions
Before your realtor sends the offer, ensure that you haven’t missed any important details. Confirm that you have all required paperwork and you have signed the document where required. Always include an earnest money deposit.
If you rush through the paperwork, and you send the offer without verifying its completeness and accuracy, you risk having it tossed out. Remember, there will likely be other offers that are 100% perfect, and the seller may not give yours a second thought.
Offer More than the Asking Price
To win the bidding war, you will likely need to offer more than the home’s asking price. Sometimes, offering just a few thousand more might do the trick. In many cases, you won’t see a drastic increase in your mortgage payment by making a higher-than-asking-price offer. Before pursuing this strategy, however, carefully evaluate your financial resources so you don’t overextend yourself.
To gauge the level of interest in the property, ask your realtor to contact the home’s listing agent. The agent may also disclose the number of offers on the table, although they obviously can’t offer specific details.
Avoid Seller Concessions or Requests
Next, ensure that your offer does not include any seller concessions. Don’t ask for help with closing costs or otherwise ask the seller to give up anything with a dollar value attached.
Finally, don’t ask the seller to throw in any home furnishings or other items that generally aren’t included with a home purchase. If you’ve fallen in love with the living room suite, or you can’t live without the sunroom furniture, find a way to purchase those items elsewhere.
Remember, if your offer is similar to another one without concessions or requests, the seller will regard the other buyer more favorably. With multiple offers on the table, don’t give the seller any reason to eliminate your bid from the running.
Show More Money Up Front
By putting a larger amount of money on the table, you show that you’re a serious, committed buyer. Before doing so, however, audit your financial situation so you don’t stretch yourself too thin.
Earnest Money Deposit (or EMD)
Your earnest money deposit is the initial amount submitted with your offer. Your realtor will retain the deposit and ensure that it’s applied to the loan’s down payment and the closing costs. For reference, an EMD is usually 1% to 3% of the home’s purchase price.
If you choose to submit a higher EMD, however, make sure you’re committed to the home purchase. If you sign the contract, and back out of the purchase, the seller may keep the EMD as compensation for their inconvenience.
Down Payment on the Loan
Making a larger-than-required down payment signals that you’re in a favorable financial position. This move also tells the seller that you intend to complete the home purchase.
Pay With Cash if Possible
If you have the available funds, paying with cash is always the best option. You’ll tell the seller that you’re a serious buyer and you have the financial resources to expedite the deal very quickly.
In addition, you won’t have to deal with a lender’s appraisal or inspection requirements. Although these are common steps in a home purchase, they’re enough to throw your offer out in a strong seller’s market.
Michael R. Santana, a GrayRobinson real estate attorney, emphasizes that a cash offer is the most clear-cut option. “Cash offers also have the important effect of keeping the deal primarily between the buyer and seller – they call the shots and not some stranger at a bank. A financed deal is usually subject to financing contingencies, which leaves a back door for the buyer to exit.”
Setting the Stage for a Positive Outcome
Using one or more of these strategies will help your offer to stand out in a competitive marketplace. By proving that you’re a committed buyer with financial resources and good organizational skills, the seller is more likely to give your offer serious consideration.
Working with a highly experienced realtor also improves your odds of success. The Poltrock Team combines extensive market knowledge with the latest real estate analytics capabilities. Taken together, these attributes have given this market-leading agency a significant edge in a very competitive marketplace.
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