In the crazy seller’s market, we are in right now, multiple offers and bidding wars on one home are happening more often than before. The housing supply is still lower than the housing demand.
If you are wondering how to get the house you want, without overpaying and waiving things like inspections, and make sure your offer is the best it can be, for your situation of course, and beat out the rest of the competition, check out and follow these tips.
Many people might skip over important steps to put in an offer quickly. If you follow all or most of these steps, you will have the edge up on your competitors.
Prove You Can Afford the Home
The first thing that you need to do is show the seller that you are a serious buyer and that you can actually close on the home. If you are planning on applying for a mortgage, obtaining a mortgage pre-approval will show the seller that you can actually afford the home. You will need an actual preapproval letter, not just a pre-qualification. A pre-approval letter confirms that you will be able to borrow a certain amount based on their evaluation of your credit score, assets, and income. While a pre-qualification is just an estimation of how much you could borrow.
A pre-approval from a lender verifies your price range to show what homes you can afford. Sellers give major preference to buyers who are pre-approved because when the time comes to close, they know you will have the money.
If you are an all-cash buyer, showing proof of funds along with your offer is a great idea.
Don’t Max Out Your Budget
Just because you got pre-approved for an ‘x’ amount of money, does not mean that you should offer that exact amount. It is a good idea to leave some wiggle room in your offer amount to possibly cover the down payment and closing costs.
Maxing your pre-approval could eliminate the wiggle room and the seller already knows you are spending up to your limit which might be a reason they will not choose you. They want to make sure you do not have to back out in the future, due to many reasons, such as interest rates rising.
When making your offer, you might want to think about offering a bit over the asking price. Especially in the crazy market we are in now, offers can be incredibly competitive so it’s a good idea to think about if you can afford offering over asking price. According to the November 2021 Index from NAR, 40% of offers today are above the list price.
Add Extra to Your Offer
Adding extra things onto your offer, can show the sellers that you are serious about buying their home. An escalation clause, for example, means that you make an offer for x amount of money but if there is a higher offer, you will increase the price to a y amount of money.
You might also want to think about the contingencies. It’s not always best to waive the financing contingency unless you are paying cash but waiving the appraisal contingency, if you have the financial situation to do so, might make your offer stand out.
Hire a Trusted Real Estate Advisor
Hiring a trusted real estate agent will help you put together a competitive but fair offer that aligns with your financial situation. Make sure you do your research before hiring a real estate agent. You want to make sure you pick the right agent for you and your area. A trusted professional will not only understand you but understand what you should do when looking for a home and especially putting in an offer.
Real estate agent has insight into what has worked with previous clients when putting in an offer and they also know what types of offers sellers are looking for, especially in this competitive market. Catering your offer to what the seller needs might help favor your offer in the long run when they are going over the offers.
Show Them Their Home Is in Good Hands
If you are buying a home that someone has lived in for a while or has sentimental attachment to, you want to show them that their house will be in good hands. Adding notes of how you can’t wait to make certain memories in the house, how you can’t wait to watch your kids grow up in the house, or even how you love some design details of the home will go a long way.
The Right Offer for You
Talk it through with your trusted real estate agent about what is best for your situation and make the best and right offer for you.