In a tight housing market, buyers can quickly find themselves competing against many other buyers who want to purchase the same home. Sellers, of course, want the best possible price for their homes. In today’s market, you need to make sure you are making a solid and competitive offer when buying a home. But it is not always the highest offered price that will lead a seller to pick one offer over another. Here are three things that you can do to increase the likelihood that your offer will be accepted.
#1. Come to the Table Prepared and with a Good Clean Offer
Of course, one of the first things a seller wants to know about a potential buyer is whether they will actually be able to carry through with buying the home. First, before even making an offer on a home, you must be pre-approved for a mortgage and be prepared to show proof of funds if you are making a cash offer or plan to put down a substantial down payment to sweeten the pot.
If you want to show that you are really a serious, qualified buyer, also consider going one step further and have your mortgage lender pre-underwrite your loan. This process shows that your lender reviewed your financials and is guaranteeing that they will give you a home loan up to a certain amount barring any financial problems popping up before closing on the home.
With a limited inventory of houses available for sale, many buyers are finding themselves competing with others who want to buy the same house. Things can quickly escalate into a bidding war with buyers coming to the table with an offer and then ending up in a bidding war when the call goes out for best and final offers. Yes, a higher offer above asking price is great, but it may not be enough to seal the deal with the seller.
You are likely to have an advantage above other buyers if your offer is clean and void of contingencies. Even if your offer is a few thousand dollars less than other buyers, you can increase the likelihood of your offer being accepted by conceding some of the most traditional contingencies that others may not be willing to do, such as the purchase of the home not being dependent on the sale of your current home or asking for the seller’s assistance with paying your closing costs. Try to avoid adding as many contingencies as you are comfortable with, including the main ones like:
- Loan
- Appraisal
- Inspection
#2. Show You Are a Good-Faith Buyer
Sellers are more likely to accept an offer from a buyer whose actions signal that they are acting in good faith and not looking to take advantage of them during the buying process. A buyer who is willing to “put more skin in the game” by putting down a more substantial earnest money deposit (EMD) is showing that they are a serious buyer and genuinely want to buy the home. Typically, an EMD is 1-3% of the purchase price and is held in an escrow account. It can be used to help pay your closing costs and down payment.
Remember, because putting down a substantial EMD supports your good intentions of buying that home. After all, it is highly unlikely that you would continue looking at other homes and trying to secure their purchases by putting down other EMDs. But before upping the ante with a greater EMD, you need to be sure that you do indeed want to buy it because it could be difficult to get that money back.
#3. Coming in Strong and Sealing the Deal
Foregoing contingencies and putting down a substantial EMD are great ways to gain an advantage of your offer being accepted. But there is still more that you can do to make your offer stand out from other offers.
With making an offer that is substantially higher than the asking price, you are running the risk of the house not appraising for that higher price. If you are making a full cash offer, this might not be a deal-breaker. But if you are relying on a mortgage, your lender may not be on board with it. So, to mitigate your risks, you could include in your contract that you are willing to pay up to a certain amount out-of-pocket to make up for an appraisal deficiency.
For example, suppose you are making an offer on a home that is listed for $300,000 and you are making an offer of $330,000. If the house only appraises for $310,000, there is a deficiency of $20,000 that the lender will expect you to pay out-of-pocket or you could just walk away from the deal (which is a contingency). In this example, suppose you put in your contract that you would pay up to $20,000 for the appraisal difference. This would then save the sale.
Another way of coming in strong is to include an escalation clause. Suppose that you made that same offer of $330,000. But now another offer has been made for $335,000. If you have an escalation clause in effect, your bid could automatically adjust in increments, for example, $2,000 up to a certain limit. So, your bid would go up to $337,000 automatically and would continue to up to your set limit if a counter-offer or higher bid comes in.
Experience Always Give You the Edge When Buying a Home
These three things can certainly help increase the likelihood that your offer will be accepted when you are buying a home in Volusia County. But don’t forget that having an experienced real estate agent to guide you through the buying experience from search to closing will also help make your home buying experience a success.
In the Volusia area, contact Palmetto Realty to connect with an agent that is ready to help you from start to finish in your home buying journey.