7 Ways to Secure a Winning Offer on Your Dream Home
In many of our local markets, we have been experiencing what is known as a “Seller’s Market”, where the number of homes available is significantly lower than the number of buyers looking for a new home. The combination of low inventory, reasonable interest rates, and an improving economy create a “multiple offer situation”, also known as a “bidding war”. For buyers, this environment can quickly become an overwhelming experience, especially if they see home after home being sold to another buyer.
Successfully buying a home is stressful enough, and when you’re competing against multiple offers and countless buyers, it can feel (almost) impossible. But, armed with the best strategies, you can win the home of your dreams!
In this article, we will discuss how you can increase the odds of winning a bidding war and successfully close on your dream home.
1) Choose the “right” agent.
In today’s market conditions, the right real estate agent will bring their experience with multiple-offer situations to the table. Once you have found an agent whose advice and judgment you trust, they will be your guide and clearly explain things so you feel informed every step of the way. Find a local expert who will provide you with the most accurate market data before submitting an offer.
2) Know the market.
With so many tools available for buyers today; it is easy to access information about the market, find comparable homes, and recent home sales. Ask yourself AND YOUR AGENT the following questions: Are similar homes selling at their list price or higher? How much more? How quickly are they selling? If most similar homes are selling at 10% higher than list price, that information can help you predict the final sale price, and increase the likelihood of making the winning bid.
3) Let your financial status speak for you.
Getting pre-approved for a mortgage loan is an important step for any homebuyer, but it is critical if you are looking in an area where a bidding war is expected. When you submit your offer and it is stacked against others, sellers tend to bring the pre-approved buyers to the top of the pile. And why not? Would you take a chance on a buyer who isn’t CERTAIN they can obtain a loan?!? Speak with your agent about finding a reputable local lender who is known and trusted. And be prepared to submit the required documents for pre-approval.
4) Offer List Price (Or More).
If you have done your research, spoken to your agent, and local loan officer; arriving at a strong initial offer price will be easier. Remember, in a competitive seller’s market, the strongest initial offer should bump you up the seller’s short list. Your research and preparation will allow you to focus on a fair market value AND stay within your budget.
5) Give the seller flexibility.
This can be done in several ways and your agent will help you find the best way to protect your interests and still allow the seller some flexibility. Communicate to the seller that although you picked a closing date, you are flexible on it. Some sellers may need 60 days to close, or they may want to close as soon as possible. The key is to make it known that either way, you are willing to work with the seller on their timeline. Part of being flexible may include removing certain contingencies that could delay the closing process. These include, home inspections, seller concessions (seller assist), and any additional inspections or deadlines.
While it’s not recommended, waiving a home inspection can significantly increase your chance of winning a bidding war. If you are not comfortable waiving a home inspection, tightening the deadlines for the inspections can also work. Telling a seller that you will have an inspection done in 3 days, instead of the “usual” 10-14 days means the seller will have their home off the market for significantly less time, in case your offer falls through.
6) Explore different types of financing, or loan options.
While working with your loan officer, talk to them about the differences between FHA/VA and Conventional Loans, Down Payment amounts, and earnest money (hand money) deposits. In many areas, a Conventional Loan is more appealing to seller since the appraisal process tends to be less restrictive, i.e. more required repairs = higher cost and a longer time to the closing table.
7) Connect with the seller through a personal letter.
When it comes to buying, and selling a home, it is a VERY emotional process for everyone involved. At the end of the day, we are human. That seller probably felt the same emotions you feel when they first purchased the home. Taking the time to write a personal letter about you, your family, and what you love about the home could spell the difference between your offer and the others. Create a mental image of the love, laughter, and joy a home brings, and how you are the perfect choice to carry on those feelings after the seller hands you the keys at closing. Ask your agent to review the letter before you send, so you do not (accidentally) say the wrong thing.
*Keep the Peace
Most of us look at a real estate transaction as a “seller side” and “buyer side”, but always remember that both sides are working towards the same goal. Stay flexible, remain level-headed, and work to meet at the point which is best for both parties. This is especially important if you find yourself in a multiple-offer situation. An additional resource is provided by the National Association of Realtors® called “A Buyers’ and Sellers’ Guide to Multiple Offer Negotiations”, ask your agent for the brochure or you can find it here: A Buyers’ and Sellers’ Guide to Multiple Offer Negotiations