The real estate market is so hot right now. I can count on one hand the number of times I’ve written an offer on a home that didn’t have multiple offers with a “highest and best” deadline over the past month. It’s tough for buyers out there right now just because there is SO much competition for so few homes. So how do you make your offer stand out so that it’s accepted? Great question. It’s not always about offering the highest price. I mean yes, offer price does of course matter, but if we’re being completely honest here, know that having the highest offer doesn’t actually guarantee you’ll get the house, it’s much more complicated than that. There are several things you can do to make your offer stand out above the others in a multiple-offer situation.
First of all, this list is assuming two things:
You’ve already gotten your pre-approval letter from your lender. This is a non-negotiable because not having one in this market will almost guarantee your offer is tossed.
You’re using some level of financing to purchase your home. Cash is king and so 9 times out of 10 a cash offer will win because they close faster, have less risk, and are much easier to deal with. However, most people need some level of financing to purchase a home, so that’s where our focus will be today.
Ready to learn how to get your offer accepted? Here are 8 things that can help you seal the deal and get the home of your dreams!
1. Act Quickly. You can’t put an offer on a house you haven’t seen, and you may miss out on a home because you didn’t submit your offer in time, so working quickly is critical. In the current market, if the home goes up for sale on a Monday, you likely aren’t going to be able to wait for the weekend to go see it. If it’s priced well and in a great area, odds are, it will be long gone by then.
2. Offer Highest and Best Up Front, even if it’s not specified by the listing agent. If you’re in a multiple offer situation, you don’t want to lose a home over a couple of thousand dollars or be stuck playing the what-if game if you don’t get the home...What if we offered a little bit more? What if we structured our offer a little bit better? All of the what-ifs will make it difficult to move on from the home if you really loved it and don’t wind up with an accepted offer. Give your best offer and if you still don’t get the home, you know you did the best you could, and it will be easier to move on to other homes.
3. Find Out What’s Important to the Seller. Every seller is different, so if your agent can figure out exactly what the seller’s motivation is you can structure your offer to cater to it. This will increase the likelihood your offer is accepted. Do they need to close quickly? Are they looking for the absolute highest price? Are they dealing with special circumstances that you might be able to help with (i.e. do they have a specific timeline for moving, have they been burned in the past by a buyer and specific contract factors are important to them, etc.)? Knowing these things can be critical to getting your offer accepted without having to throw more money into the offer price.
4. Submit a Clean Offer. A “clean” offer is one with the fewest conditions, requests, and contingencies. The fewer the asks the better. There is much less risk to the seller this way and the process is generally less stressful and smoother overall. Contingencies are obstacles to a successful closing and so the fewer obstacles there are, the more attractive the offer. Some examples might be a contingency on the sale of your property, contingency on your ability to receive financing, and a contingency on inspection. However, very rarely do I recommend a buyer wave an inspection contingency as this can cost you a lot of money in potential repairs if any large issue is present. Doing things like limiting the number of contingencies, not asking for closing costs or special requests like personal property can generally make your offer more attractive overall.
5. Up Your Earnest Money Deposit. Your earnest money is the seller’s proof that you are a good-faith buyer. Typically, your earnest money is about 1-3% of the purchase price but more money down shows that you are more serious about purchasing the home. As long as you hold up your end of the bargain and don’t back out outside of your due diligence period, the money goes directly towards your down payment and closing costs so it’s no extra money out of your pocket. However, if you get past that period and decide not to buy your home, know that your earnest money is kept by the seller as compensation for time lost in the process.
6. Waive the Appraisal Contingency. With homes selling so far over and above list price right now, I can tell you that the appraisal is generally my sellers’ number one concern. If the home doesn’t appraise for the offer price, a bank won’t finance the difference between the appraised value and offer price. This can potentially leave you and the seller, at best back at the negotiation table and at worst back at square one if you can’t come to an agreement. If you have the cash on hand, waiving the appraisal contingency and offering to pay any difference between the appraised and offer price will almost guarantee your offer is towards the top of the pile. You just have to understand the risks of this tactic and have cash on hand to pay any potential difference.
7. Speed Up the Process. Generally (unless your agent has discovered otherwise when talking to the listing agent) a faster close is preferred by a seller. Doing things like shortening your due diligence period or offering an earlier closing date is attractive to the seller because once they decide to sell, they usually want to wrap the process up as quickly as possible. However, know that if you’re using financing, you typically will need about 30-45 days to close for the bank to get through all of the paperwork. Talk to your lender to see if there are ways to speed up the process as this can go a long way in making you more competitive without having to front extra money. Cash buyers have the advantage here because they have significantly fewer hoops to jump through and can generally close very quickly.
8. Up Your Down Payment. Offering to pay more money down is another good faith sign to your seller. A higher down payment showcases that you are in a good financial position and capable of meeting all financial obligations. A really low down payment can be a signal to a seller that there might be difficulties with any unexpected costs during the home buying process and is an additional risk to the deal going through.
Though these things may seem relatively small, they can go a long way in making your offer stand out so you can win that bidding war! Remember, it’s not always just about who offers the highest price. Establishing that you are a serious buyer in a good financial situation will make your offer stronger without having to throw even more money in. In addition, going the extra mile by tailoring your offer to your seller’s needs will go a long way too.