How To Make A Winning Offer On A Home In A Competitive Real Estate Market
Updated: Oct 29, 2021
Following potentially months of looking, you might just have found your dream home. You're on stable financial footing, and you want to take the plunge. The only problem is, everyone else is looking for homes too, meaning you're facing competition for just the one home you're looking at.
It's definitely a seller's market right now, so bidding wars happen a lot. Too many buyers are competing for too little inventory among the active listings. This is when great homes that check a lot of boxes draw multiple offers, putting you in a cutthroat competition for the home of your dreams.
Fortunately, there are many things you can do to make your offer stand out from the crowd. Every sale is different, but these techniques might just be the ones that put you over the top of everyone else. Keep reading to learn what you can do.
Include A Preapproval Letter As Part Of Your Offer
When your offer includes a lender's letter stating that you have already had your credit rating examined and you're able to afford a home, that carries serious weight with sellers. They know that you're ready to buy. You're not just serious, but you're also qualified and committed to a certain lender. Offers with pre approval letters often win out over offers that are higher but without such letters.
Be Friendly With Your Offer
Don't put demands in the offer that might make the seller irritated or even angry. If it's typical in your market for the buyer to pay any expenses for title insurance, then don't try to pass that off on the seller. Also, if lots of buyers demand the possession of the home by end of business on the closing day, why not give the sellers a few days to move out to demonstrate some generosity?
Offer Your Top Dollar From The Start
In a market like this, bidding wars are happening on the best homes. Don't put in a low 'starter' offer. It might not even get looked at. Determine what your top dollar is for a certain home and then offer that from the get-go.
Put Down A Bigger Deposit
When your earnest money deposit is bigger than anyone else's, it shows that you're willing to put your cash into this. If other buyers are offering 1-percent deposits, go for 5 percent. Larger deposits show that you are truly committed as a buyer.
Pay All Cash
In the end, the seller should be getting all cash. That happens to them even when buyers get a loan. However, if you put your offer in as 'all cash', they know your transaction won't rely on getting loan approval. That speeds things up and simplifies matters for them, making you more alluring as a buyer.
Shorten The Inspection Periods
Most conventional real estate purchase contracts let the buyer have a certain number of days for performing inspections prior to the buyer moving ahead with the transaction. Talk to your agent about what the market average is your area for such things, and then consider halving it. You might have to specifically waive certain legal rights you have due to federal statute.
Waive A Few Of The Contingencies
Do this only after consulting your legal advisor and if you are personally comfortable putting your deposit at risk. Contingencies for inspections, appraisals, and even loans might be things you can waive. This does carry some risk, however. For instance, if your home winds up appraising under the sales price and the appraisal contingency was waived, then you'd have to make the difference up in cash. Still, waiving contingencies can make your offer stand out from competitors.
Put It In Handwriting
A written offer is a good thing to present to a seller. A handwritten letter is something great to present to a seller. While they're sifting through repetitive documentation from multiple bidders, adding in a personalized note to them at some point can help you stand out in their minds. Appeal to their emotions, and tell them why you love that home. Give them a list of reasons why you want your offer to win. If you can evoke empathy and joy from a seller, your emotional appeal can trump any numbers someone else throws out at them.
Offer To Close Fast
With the exception of extenuating circumstances, a lot of closers like closing in 30 days or even faster. If you're able to offer just 21 days, then you might win out. Sellers want to get things done, and just having offers doesn't mean they can walk away just yet.
Have The Biggest Offer
The biggest offer doesn't always win, but money does matter. Never ignore your budget or get caught up in the emotion of a bidding war. Know when to walk away and find a home that fits your budget and needs.
Hire An Agent Who Is Quick On Their Feet
An effective agent is one who is constantly going over the marketplace looking for new properties and leads. They also network with other agents. If you tour a home you love, a real go-getter might have you draw up an offer while you're still parked there and then call the listing agent, whom they know and trust. You might be able to present an offer that day, and sellers respond to such brevity.
If you have decided to buy a home, making an offer on a home with a realtor is the best way to get a quick sale. An experienced realtor will help you from the time you contact them until the time of the sale. Making an offer on a home with a real estate agent will give you the most control and peace of mind when selling a home.
When you contact a real estate agent, they can assist you in the entire home-buying process. They are able to show homes for you and find one that is the perfect match for you and your family. They can also show you homes that are comparable to yours and make suggestions on how to price your offer. You don't have to worry about making an offer on a home that is not suitable for you and your family.
If you want to make an offer on a home with a real estate agent, you can do so at any time. When you contact the company for assistance, they will schedule a time that works best for you. Real estate agents can provide you with helpful information about making an offer on a home.
Skip The Home Inspection
One effective but risky way to make your offer stand out is to waive the home inspection altogether. This is a step further than just waiving the related contingencies. You should have the right to a home inspection before finalizing the deal, but skipping it works wonders for sellers. For starters, they close the deal and get their money faster. Secondly, they wouldn't necessarily be on the hook for repairs or have to renegotiate a lower price if issues are discovered.
Usually, home inspections are performed by an experienced home inspector who either has the proper training and qualifications to do such examinations. An inspection typically confirms that there are no safety hazards on the property and that the general building condition does not endanger the lives of those who occupy the residence or its related amenities.
If there are concerns, the inspector will provide recommendations for improving the safety features or for replacing or repairing any identified safety hazards. In some cases, additional inspection may be required, particularly if a new tenant is moving in or if a significant amount of damage is found that requires repairs. A qualified home inspector can provide these additional recommendations.
There are many aspects of the home inspection that can be considered critical to the overall condition of the property. A thorough inspection report should include inspections of all systems, including the heating, cooling, ventilating, air conditioning, electrical, and interior plumbing. In addition, the home inspection should include a review of the HVAC (heating, ventilation, air conditioning) system. For those who have made the decision to hire a home inspector, it is important to have a thorough discussion with this professional before the inspection begins.
Mold and mildew can cause health problems in individuals who are sensitive to these chemicals. Mildew can also create a false ceiling, floor, or wall impression that is actually above the property that it is supposed to be on. This illusion can cost the buyer money by decreasing the value of the home because the inspector has seen the ceiling, floor, or wall and cannot see the area where the water damage occurred. Another concern that some buyers have relates to whether the home inspectors will test for asbestos.
Your odds for finding success will rise with each winning strategy among these tips that you include with your offer. In many cases, it's not just about the money. Sellers are of course looking to get paid, but they consider the overall offer as a whole, and they frequently look for someone they consider to be a great fit for their home. This is one reason why you should only work with an agent who goes into the negotiation with positive energy when trying to put together a wonderful offer for you.