The market is hot right now, and homes are selling fast with multiple offers. Below are six important tips to remember if you’re a buyer trying to compete in today’s market; if you find yourself in a bidding war for the house of your dreams, you’ll be glad you read this.
1. Increase your earnest money. The days of $500 and $1,000 earnest money deposits are long gone. Increasing your deposit shows that you are a serious buyer acting in good faith. Our buyer specialists recommend a minimum earnest money deposit of 1% of the total purchase price; in particularly competitive situations, we do recommend a 2% to 3% deposit if possible.
2. Show the sellers that you’re qualified. Many lenders do a basic pre-qualification report, meaning they pull your credit report, check your recent pay stub, and don’t investigate beyond that. Finding a lender that will begin the underwriting process in advance of making an offer will strengthen your buying power. In some cases, underwriting can be completed subject to an appraisal in advance of going under contract, which makes your pre-approval as good as cash. Our lending partner can provide you with this option.
3. Offer terms that the seller wants. In advance of making an offer, a good real estate broker will contact the listing broker to explore potential terms that the seller is looking for in their ideal offer. This can include things such as a quick closing date, or an allotted rent-back period. Sweetening the pot doesn’t always mean raising your price; tweaking the terms in the sellers’ favor can help your offer stand out.
4. Shorten or waive contingencies. In multiple-offer situations, a seller’s decision often comes down to the contingencies that are built into the contract. Shortening the contingency period or making the inspection contingency a pass/fail metric and waiving the financing contingency can make your offer very appealing. If you have the right lender and real estate broker, these contingencies can be adjusted or removed altogether with the confidence that your best interests are still protected.
5. Make it personal. Write a letter to the sellers telling them everything you love about the home. There have been a few scenarios in the past where our clients wrote letters to the sellers and had their offers accepted over multiple other higher bids.
6. Write your best offer. In a strong seller’s market, don’t expect there to be any opportunity for negotiation. You have just one chance to make your offer shine, so put your best foot forward and don’t try to play any mind games.
If you have more questions about the purchasing process and want to discuss this topic in greater detail, don’t hesitate to reach out to us via phone or email. One of our highly capable buyer specialists or I can talk to you about setting up a consultation to help you start your home buying journey off right.