How To Win Against Multiple Offers
It’s a seller’s market and you are ready to buy! You have found the home you want and are writing a full price offer. Done deal, right? Not so fast. Because we have more buyers than homes for sale in this market, your full price offer may not be enough. Here are some tips to help you get your offer accepted.
*Make Your Offer ‘Clean’ | A clean offer does not have any contingencies or other financial constraints. A clean offer should also not contain any seller concessions, such as closing cost assistance. Contingencies offer more opportunity to back out of a contract and are less appealing to a seller who receives multiple offers. Prequalification and preapproval on your mortgage loan is also a huge plus. If the seller has provided an inspection report from a reputable company, you can forego an inspection contingency with little risk involved. Finally, asking for items noted as excluded in the contract can weaken your offer.
*Make Your Offer Above The Asking Price | This is definitely not the market to make a low offer. You need to make your strongest offer, and enough to win out in a multiple bid situation. If you want the house, you most likely will need to offer above the asking price. Don’t let this overwhelm you. An offer $2,000 to $3,000 over asking price can achieve the effect you want. It tells the seller that you are serious about purchasing their home. This will not change your down payment or monthly mortgage payments significantly.
*Use a Stronger Earnest Money Deposit (EMD) | Your earnest money deposit is proof that you have good intentions and are a good faith buyer. Normally, the real estate broker holds the EMD and it will contribute to your down payment and closing costs. Standard EMDs are about 1-3% of the purchase price. Make sure that you intend to buy the home, if your offer is accepted and you do not move forward with the purchase, your EMD may be in jeopardy.
*Waive The Appraisal Contingency | This poses the most risk unless you have enough cash on hand to cover a potential shortfall between the offered price and the appraised value. That can happen in neighborhoods that are recently experiencing a resurgence in property values, or gained interest. Your offer indicating that you intend to bring money to the table if the home does not appraise will definitely set you apart.
*Add An Escalation Clause to Your Offer | Your escalation clause says that your offer will outbid others up to a predetermined maximum price. Remember though, even with an escalation clause, it may be in the seller’s best interest to submit a counteroffer. The seller can also raise the listing price instead of submitting a counteroffer or accepting your offer with an escalation clause. We suggest consulting with your lawyer prior to writing an offer with an escalation clause.
*Pay With Cash | Cash offers keep the deal primarily between the buyer and seller. A financed transaction is usually subject to financing contingencies, which leaves a way for the buyer to exit the deal. When buyers finance with a lender, the deal is subject to the lender’s process. A cash offer indicates that you are a serious buyer with financial means to expedite the closing process.
*Submit a Complete Offer | Pay attention to the details. There are common mistakes made in real estate offers that can easily be avoided. Make sure you are not missing disclosures, EMD, and purchase agreement pertinent information. Mistakes like these can get your offer tossed aside in a competitive market. Cross your t’s and dot your i’s.
In today’s inventory-constrained real estate market, you need all the assistance and support you can get. We will assist with many of these details to make purchasing your new home in this environment less stressful and more successful. In this fast-paced market, it is vital to have your offer ready to go, we will work with you to prepare prior to your home search, during the negotiations, and after your offer is approved. Contact us to connect.