How To Keep Your Home Offer Competitive
How To Keep Your Home Offer Competitive
Buying a house is an exciting time but how to keep your home offer competitive in a seller market?
You have found the home of your dreams and you are ready to submit an offer. However, when you make an offer on a home with multiple offers it can be stressful and frustrating if your bid doesn't get accepted.
To help you better understand how to make an offer accepted on a home, I'll give some tips below that will hopefully help you out in this process.
The first tip is about preparing properly before making an offer. It's important that you know what questions and concerns need answers before submitting your bid because if there are any hidden issues with the property or seller's history it may be too late once they accept your bid. Also, as a buyer, it’s important not only to know what terms should be included in your contract but also to be able to negotiate them well enough so that no one gets taken advantage of during closing time. If we take into account these two points above, then the rest of the tips will make more sense for sure!
Make sure you have a pre-approval letter from your bank or mortgage lender
You will need this letter to show the seller that you will be able to buy the property. A pre-approval letter from your bank or mortgage lender is a crucial part of the loan process. It will guarantee that you are eligible for the amount of money you want to borrow. Make sure you have this document in order before writing a home purchase offer.
Typically, lenders won't give pre-approval without reviewing all financial documentation from the buyer. Once approved, they usually underwrite your loan for you and tell you how much of a mortgage payment you can afford with your income.
This should help make sure that no matter what happens with the appraisal or inspection process, you'll have enough money for closing costs and down payments on top of buying your new home!
Increase your earnest money to keep your home offer competitive
Most buyers think that offering 1percents –2 percents of the purchase price is enough
If you want to make sure your offer stands out, you can offer a larger earnest money deposit. You’ll be showing the seller that you are serious and have confidence in the home. Remember, this money is at risk if it comes down to escrow closing and your deal falls through so make sure you’re confident in both yourself and the property before committing more than 2%.
Offer 3-10 percent earnest money as a demonstration of commitment toward purchasing their house. This will show them that they should take your offers seriously because they know how much effort going into making this work for them.
Know the seller's motivation to help you negotiate the best price
Most people don’t know what motivates the seller to sell their house for one price over another, which makes it more difficult to negotiate a good deal.
If you can figure out the motivation of why they want to sell their home quickly or slowly, you can anticipate and adjust your offer accordingly to keep your home offer competitive.
The buyer can get a better idea of the seller’s motivation by asking open-ended questions that give them an opportunity to talk without feeling like their being interrogated. For example, you could say something like “I understand your home is in great condition and has been well maintained but I was wondering if there were any issues you haven’t mentioned yet?
By identifying what motivates the seller, you will have a better idea of how much time they need before closing on the property – or whether it makes more sense for them to wait until after school lets out next year so their kids are not uprooted from their friends. You might also be able to negotiate with them based on what's most important to them
Know Seller’s Motivation is an easy-to-use real estate negotiation tool that helps sellers decide how much time/money they have available (or would prefer) before closing so that buyers understand this information and use it in negotiations with sellers.
Present an offer with less or no contingency
A typical buyer’s offer will often include a contingency for financing, which is typically not an issue in most cases. However, when the housing market becomes limited or competitive as it has been recently, buyers need to make an offer that offers the most appeal to sellers. This means offering less or no contingencies in order to gain an advantage over other buyer offers.
Presenting an offer with less or no contingency at all can be intimidating, but it doesn’t need to be. By eliminating unnecessary requirements from any given transaction – especially those that take time away from your seller – you increase your chances of landing an agreement quickly and smoothly getting through closing without disruption or delay. In today’s competitive housing market, presenting an offer with less or no contingencies is one way savvy buyers distinguish themselves from other offers on the table by proving they are serious about moving forward as soon
Shorten the due diligence period when buying a house
It is not uncommon for homebuyers to want to do a more thorough inspection of the property than what was agreed upon in the purchase contract. This can lead to issues between buyer and seller where one side may be unhappy with the results or it could even end up delaying closing on time
While most contracts allow both parties addendums, it is important to keep in mind that you may have already spent money and are under pressure from your lender's timeline as well. A longer period gives more time for errors in judgment by either party
By shortening the due diligence period, you will show a lot more confidence with your offer when compared against other offers presented by other buyers who would take their sweet time during this period. The shorter due diligence period also shows how much trust there is between buyer and seller.
Escalation Clause Helps home buyer get the deal
If you don’t get an escalation clause in your offer, then there is no way for you to protect yourself from losing the deal due to another buyer offering more money than yours.
An Escalation Clause gives you the protection that we all need when purchasing a home in multiple offer situations. It allows us as buyers to state what amount of increase our bid will go up by for every $1,000 over the initial asking price offered by another bidder until we reach our max amount (the limit set). This helps prevent getting outbid at the end because someone else was willing to spend more no matter how much their final bids are above ours!
Write a letter to the homeowner while submitting a home purchase offer
People are more likely to deal with someone they like or can empathize with.
Your letter doesn’t have to be super formal, but it could be a short note explaining yourself and plans for the property. It might help you get accepted faster, saving time and money on your end.
You should always remember that the seller is just another human like you. People are more likely to deal with someone they like or can empathize with, so including a letter with an offer may boost your chances of getting accepted. Your letter doesn’t have to be super formal, but it could be a short note explaining yourself and plans for the property. It might help you get accepted faster, saving time and money on your end.
The key here is sincerity! Don’t try too hard or get overly promotional with your offer; just write something short, sweet and sincere telling him or her why this house appeals to you personally without mentioning any numbers or prices until the end of the letter when it comes time for closing details (this helps avoid being perceived as trying to “buy” someone). Keep it conversational but professional – no need for flowery language; just like writing a note for anyone else who might be reading it.
Shorten the home buying period
As a seller, you have to wait until the property is sold before moving on with your life and buying a new home.
For example, if you are looking for a closing date of April 1st, offer March 15th instead. This will make it stand out among all other offers since most sellers want their homes to be off their plate by then. You can get creative with this tip as well by offering an earlier or later closing date depending on the season/time of year in which you're selling the house (such as December).
Find a real estate buyer's agent that can help you to win the bid.
The market is hot, so it's better than ever a time for buyers. However, it also means that the competition has never been fiercer. If you're going to win the bid against multiple offers then you need an agent who knows your neighborhood and can advise on what price to offer and how best to position yourself in order to win.
Find an experienced buyer's agent who knows your neighborhood well enough to get you through any bidding war or negotiation process. When you're ready to put in an offer on a house, find someone who has experience negotiating for buyers at this price range so they know all of the tricks other agents might try!
We make finding a good real estate buyer's agent as easy as 1-2-3! Just fill out our buyer form (or call us) and we'll match you with one of our top agents based on your needs and budget requirements. It doesn't matter if it's for your first time home buyer or experienced homebuyer; we have someone who can get things done right for you!