How To Make a Competitive Offer in a Seller’s Market
A common occurrence that many homebuyers are running into in today’s competitive real estate market is that of multiple offers. Here’s how the situation plays out: You find a house you love, your REALTOR® checks to see if any other offers are being made on the property, and you find out, yes indeed, there are many competing offers coming in about the same time yours. So what do you do next? Well, you plan to make the best possible initial offer, so that yours will be noticed above the rest. To do this, there are several things you should be considering. Here is how to make the most attractive offer to homeowners in a competitive seller’s market.
First of all, it is important to understand that different sellers will be persuaded by different things, but typically the highest and best offer will usually get the prize. Homes that are priced to move in a competitive market will see a lot of action within hours of listing, so in order to stay competitive you have to stay on top of your game. Once you find a property that you love, do not wait, make an offer immediately. To do this, you MUST have everything ready to go. Having your pre-qualification letter from your lender is the first step. In this current post-pandemic market, offers are often made above asking price. Have this discussion with your lender ahead of time, so you know exactly what your loan limits are if your REALTOR® advises adding an escalation clause to your offer. Keep in mind, with an escalation clause, you may end up paying more than the home’s appraised value. Also ask your lender about financing the appraisal gap – they should have some ideas on how this can be implemented. The loan officers at Home Mortgage Alliance can explain the many mortgage scenarios and help find the perfect loan program for you based on your budget. Putting more money down than is required for the earnest check can also show the sellers that you are seriously committed to your offer.
Waive or shorten any contingencies as much as possible. Many REALTORS® will tell you these days that homeowners will barely even consider an offer that has contingencies attached to it. So, if it is possible to make the deal without them, that is your best bet. Getting rid of the appraisal contingency tells the seller you are willing to buy the property no matter where it appraises. Waiving the inspection is not prudent, but you could add that the buyer won’t ask for more than a certain amount of money for any repairs that need to be made. Or, only include inspection termination dates, and not objection dates. Being flexible with the closing date to allow homeowners to have enough time to find other living arrangements can also make your offer more attractive. If a homeowner feels pressured to move out before they have secured other accommodations, they might be hesitant to accept.
Lastly, write your best offer first. The days of low balling a homeowner in hopes of getting a deal are over! Although they may return someday, at the moment most homes that are fairly priced are getting what they are asking or more. If you play hardball the chances are good that your offer will be beat by someone else who is willing to pay what the homeowner feels the house is worth.
Be sure to discuss all of these points thoroughly with your RE/MAX Alliance REALTOR® before you even begin your homebuying journey. Your REALTOR® will have a solid understanding of the market, and will be able to guide you through the process of making a competitive offer.