Here are five tips that will make your offer stand out in a bidding war.
I’m not breaking any news when I say it’s a highly competitive seller’s market out there. We have extremely low inventory, which means you’ll probably have to compete against more than one person to purchase the home you want.
How do you make your offer stand out? Here are five tips to keep in mind:
1. Submit a large earnest money deposit. When you put down a deposit alongside your offer, there’s always an offer deposit, but that second purchase and sale deposit is very important. Your agent should advise you on how to make a strong deposit because 1) It shows that you’re financially strong, and 2) It shows that you have skin in the game and are committed to buying the property. Sellers always worry about what happens if something goes wrong and you default on your offer, but as long as you’re committed to the property in question, a strong deposit will help it stand out against the competition.
2. Show the seller you’re qualified. Work with your lender and ask for a strong pre-approval. Have them write as much as they can to demonstrate your strength in that pre-approval. Then, take it a step further and ask your agent to contact the lender and have them reach out to the listing agent so they can reassure them that you’re a strong, well-qualified buyer who will make the sale process smooth and stress-free.
3. Give your seller time to move. Let them know you’re flexible on the closing date if you need to be. Give them time to secure suitable housing, or close and move out of the home. For example, offer them an additional day after closing so they can take that day to move. Sometimes, back-to-back closings can be difficult on the selling side, so making that offer shows you’re flexible and are looking out for their interests.
4. Be smart with your contingencies. Obviously your agent will want you to be well-protected, but be mindful to not make your contingencies so aggressive that it scares sellers off. For example, offer a monetary window in your home inspection that says you won’t nitpick smaller items. In general, keep the language in your contingencies as loose as possible (while still protecting your interests).
5. Use an escalation clause. You can use this clause to escalate the price of your offer over the next highest offer up to a certain point. For example, let’s say you offer $100,000 for a property with an escalation clause that allows it to go $2,000 over the next highest offer up to $115,000. If someone makes an offer of $105,000, your offer then automatically jumps up to $107,000. Escalation clauses can be tricky, so make sure you speak with your agent about them before utilizing one.
Remember, even if you feel like you don’t have a chance to win the home you want, it’s always good to put your offer forward anyway. You don’t know what can happen, and you don’t know what the seller is thinking when they choose an offer.
If you have questions about today’s topic or there’s anything else I can help you with, don’t hesitate to reach out to me. I’d love to speak with you.