A competitive market doesn’t have to slow down your home search! Your realtor® will be there to support you in determining an appropriate offer strategy, given your motivation, plans for the future, the CURRENT inventory and, “replaceability” of the home.
Here are 12 ideas you may wish to consider:
- Have your pre-approval letter or proof of funds in hand. You may have a great offer to submit, but if you can’t back it up with proof you are qualified to purchase the home the seller may just move on. It is also important to have strong financing terms when possible and to use a reputable lender who Is known to close loans quickly and easily.
- Make a cash offer if you are able. If not, make as large a down payment as possible, and use a lender that communicates effectively with all parties.
- Offer more than the asking price. We will do a comparative market analysis to give you a good idea of the home value as soon as you decide to make an offer. If it’s not too out of line with the CMA or your budget, offer more than the asking price.
- Use an escalation clause. Let the seller know your offer isn’t the highest you will go by including a clause stating that you will increase your offer, up to a set price, if the seller shows you a higher offer from another buyer.
- Keep your offer clean and simple. Don’t ask for contingencies that aren’t necessary to close the transaction.
- Shorten the inspection period & offer to take the home As-Is or to cover a certain amount in material defects that may arise during the inspection. Asking for a shorter inspection period lets the seller know that you aren’t going to waste anyone’s time. I will find a home inspector who has availability, and I can even schedule your inspection proactively.
- Waive the appraisal or agree upfront to make up some or all of the difference, should the property under appraise.
- Have your earnest money deposit ready. Offer a deposit that sends the message that you are serious about your offer and have the funds ready to turn in as soon as your offer is accepted. Typically this means the entire deposit upfront, within 3 days of the contract being executed (ie signed by both parties). This can be refundable if there are any contingencies such as an inspection period.
- Need closing cost help? Sometimes sellers will contribute, but in competition, it is less likely. That said, consider asking your lender about a “lender credit.” Raising the offering price to offset the closing cost help is another option, so long as the increased offering price does not exceed the expected appraisal value.
- Try to accommodate the sellers’ needs and preferences. For example, offer a Post Settlement Occupancy or “rent-back” if you are in a position to do so. This is often agreed to at a per diem rate, equivalent to the buyers’ carrying costs. Note: In a competitive market, it is not unusual to see this offered at a reduced rate or even at no cost to the seller.
- Offer to pay the seller's side of transfer taxes and recordation fees. Instead of raising the sales price, you can offer to pay their side of these closing costs. Maintaining a lower sales price can help alleviate concerns the listing agent and seller might have about the appraisal meeting value.
- Be diplomatic with negotiations after your contract is signed. Remember that the seller has other interested parties to fall back on. If you turn ugly after the contract is signed, making additional demands or not following through with your promises, the seller may hand you back your deposit and work with someone else.