Steven GrossmanNew Jersey And New York Mortgage Officer NMLS#: 36571
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In a seller’s market, there are more buyers than there are homes available for sale. But, despite the low inventory, you’ve finally managed to find a home that is perfect for you and your family. However, the market is extremely competitive so there’s a good chance that even a full-priced offer isn’t going to cut it. In that case, follow these steps to get your offer accepted in a seller’s market so you can finally move into your dream home.
1. Get a Pre-Approval Letter
Obtaining a pre-approval letter is a great way to get a competitive edge before you even begin your search. By showing sellers you’re serious about buying a house, they’ll be more likely to trust and accept an offer they receive from you.
2. Make Your Offer as Clean as Possible
A clean offer is one that doesn’t have any financial constraints, such as being contingent on the sale of another property. A clean offer is also free of any seller concessions, or things that a buyer asks for outside of the offer price, such as assistance with any closing costs.
Traditional contingencies include loans, appraisals, and inspections. While they’re designed for your protection, giving them up makes your offer seem more appealing to the seller because you’ll have less opportunity to back out of the contract that you’ve written.
A sellers market does not give buyers the opportunity to make a low offer with the hope that it’ll be accepted. You need to focus on making your offer strong enough to beat out any competition if it results in a multiple-bit scenario. If you’re set on a specific home, you’ll need to be prepared to go above their asking price.
However, you shouldn’t let the thought of offering above-asking intimidate you. More often than not, you’ll only have to offer an additional $2,000-3,000 more to beat out the competition. While this amount shows the seller that you’re serious about buying their home, it will barely affect your monthly payments in the long run.
4. Make a Larger Down Payment in Your Loan Program
Offering a larger down payment stands as a sign of good faith to your seller. No matter what type of loan you choose, showing your seller that you’re in a good financial position always makes your offer more attractive.
5. Put Down a Stronger Earnest Money Deposit
Putting down a stronger Earnest Money Deposit (EMD) is another way to prove your financial stability. Typically, an EMD is about 5-10% of the purchase price of the home and your real estate broker will hold onto your EMD to contribute it to the down payment and closing costs. However, putting a larger amount down can show sellers that you’re a genuine buyer with serious intentions.
6. Add An Escalation Clause To Your Offer
An escalation clause allows your offer to outbid other offers up to a maximum price. This stipulates that your offer will be increased if a higher offer comes in. Please note, even if you provide an escalation clause, the seller might still issue a counteroffer. A counteroffer would be in place of accepting your escalation clause offer. If you decide include this language, consult with a lawyer before you submit your offer since your lawyer would write this clause into the contract.
7. Write a Personal Letter to the Seller
If a seller has lived in their home for many years, there’s a good chance that they’re emotionally attached to their place of residence and want to ensure that it will be in good hands. Including a letter that tells the seller a little bit about yourself, why you love their home, and why you want to make it your own, can add a personal touch to your offer and stand as the difference you need to win out in a close bidding situation.
8. Be Flexible With Your Closing Date
Being flexible with your closing date is a relatively simple way to appear more appealing than other buyers. If a seller has flexibility with you, they’ll be more likely to accept your offer for the sake of convenience on their end.
9. Avoid Asking for Personal Property
Especially in close bidding scenarios, not asking for personal property can be the difference between your offer and someone else’s. Asking for excluded items weakens your offer so it’s best to avoid this practice altogether.
10. Make Sure Your Offer is Complete
This is one of the simplest and most common mistakes in a seller’s market. While paying attention to the details of your offer may seem like a no-brainer, finding mistakes in this process is more common than you might think. From missing disclosures, EMD, or any other pertinent information for the purchase agreement, mistakes like these can easily result in your offer being pushed to the side in a competitive market.