How To Make A Competitive Offer For A House When Buying
You have found your dream home? Congratulations! Now is time to put in an offer that will set you apart from other potential buyers. However, you do not want to overpay can the property. It can be a delicate balance, especially when you are buying a home in a sellers’ market and you not you need to put in a competitive offer. This list will give you some tips on how to make your offer stand out in a hot market!
- Get pre-approved by your lender.
In a competitive market, time is often of the essence when you are buying a house. Put all the chances on your side by getting pre-approved for a mortgage before you start looking at houses. A pre-approval letter shows the buyer that you are serious and prepared.
Keep in mind that, from a seller’s point of view, not all mortgages are created equal. Although government-backed mortgages like FHA, USDA and VA loans are advantageous for the buyers with low-interest rates and little to no down payments, sellers might prefer potential buyers with loans that can close more quickly and easily like a conventional loan with a hefty down payment.
Of course, cash is king. If you cannot afford to put in an all-cash offer, try to offer the most substantial down payment you can put together.
- Offer your best price from the start.
Lots of buyers try to keep their highest and best offer for the last minutes of negotiations after a sellers’ counteroffer. However, in a sellers’ market where your offer is likely to compete with several others, that strategy might hurt you and put you out of the negotiations entirely.
To put in a competitive offer, you might want to increase your down payment, put in your highest and best offer from the start or put in a full price offer. A different strategy would be to insert an escalation clause in your offer stipulating that you are willing to increase your initial offer by a given amount in the event that you find yourself in a bidding war situation.
- Make the process quick and easy for the seller.
It is likely that the sellers want to close on the house as soon as possible. Make your offer stand out by showing that you are willing to go above and beyond to help them.
Remove as many contingencies from your offer as you feel comfortable. If you can carry two mortgages, do not make your offer contingent to selling your house. If you are flexible on the move in date, offer to close within 21 days instead of the regular 50. If you can afford it, you can let go of the appraisal contingency that comes with most contracts: in which case, you will have to pay for the difference if the appraisal does not come in at offer value.
Removing the inspection contingencies is also a possibility, but it is not recommended unless you are very confident about the condition of the house you are interested in.
- Write a personal letter.
Finally, if you have limited means to offer a financially competitive offer, you can go personal by writing a heartfelt letter to the owners on why their home appeals to you and ensuring them that you will take good care of it. It can make all the difference if the seller has to decide between otherwise similar offers.