Guest Submission by: Beatrice White
Moving Offices San Diego
Alt: A buyer and an agent shaking hands
Whatever you do in your life, it's always wise to stand out. That is the way for others to notice you, remember you, and as you will soon see, to get your way. If you want to get your offer accepted in a seller's market, you have to stand out. And there are more ways than one to do that, which is pretty fortunate since a seller's market is a tough place to look for a dream home.
What is a seller's market?
If you have decided to buy a home, you already know that it is a substantial investment. One of the most significant ones you will make in your life. As such, it is not a matter you can approach lightly. Thus, it is always best to work with a professional who will guide and advise you.
So, let's assume you have hired a good real estate agent. Since you are on this page, they have probably informed you that you are shopping for a home in a seller's market. Then, they have explained that it means there are way more interested buyers than there are available homes.
As a result, you may have to hold your horses and put off purchasing green packing materials for the move for a while. Still, pat yourself on the back for considering sustainable materials you can use to pack your household. But for now, focus on the bidding war you are about to go into. And to win, you have to gear up with some weapons.
While in regular circumstances, mortgage pre-approval and an offer for the asking price will give you a competitive advantage, you have to go a step further in a seller's market. Well, actually, a few steps further.
Tips to help you get your offer accepted in a seller's market
If you are buying a house in a hot, competitive market, it means that yours will be only one of many offers the seller receives. When this happens, you will enter the bidding war. And the tactic you should use to win is to get your offer noticed. Sure, it is not easy to come out victorious, but it is possible. Many have done it, and so can you. All you need are a few tricks up your sleeve, and we are there to hand them to you.
Go over the asking price, but make sure you can cover a possible appraisal gap
Probably the best way to make your offer stand out is to bid over the asking price. However, when you do that, you may bid over what the bank appraised the home for. That means that your mortgage won't cover the total price, and you may have to come up with some extra cash to cover the difference.
For example, say the cost of a property you are looking at is $200,000. So, you bid $220,000, but the bank appraises it to only $210,000. This means you have to prepare an additional $20,000 to cover the gap. Alternatively, you may try to convince the seller to accept the appraised value. Finally, you can also walk away from the deal, which sellers don't love, even in a hot market.
In this situation, the seller will favor the person who can cover the difference even if it's not the total amount. For instance, you bid $220,000 for a home priced at $200,000 but appraised at $210,000. Now, let's say there is another offer, exactly the same. If you offer $2,000 appraisal gap coverage, but the other bidder doesn't, you win.
In a competitive market, you have to act fast. Often, sellers set a deadline by which buyers can submit their offers for review. You can gain an advantage if you submit a strong offer early.
And this makes perfect sense. Put yourself in the seller's shoes. Even in the seller's market, you cannot be completely relaxed. So, you put your home on the market and wait. The wait is always an anxiety-filled time. So, it's highly likely you will review those first offers with extra care. Then, as the deadline approaches and dozens of offers start streaming in, they will all blend into an indistinguishable blob. But the first ones will still be at the back of your mind, clear as day.
Offer more earnest money
An earnest money deposit is the way to show that you are serious about the purchase, and it is usually 1-2% of the price. You can increase the deposit to signal that you really want the house. The higher you go, the more attractive you become. The good news is that earnest money is refundable. So, if you have to back away from the deal because of the home inspection, financing troubles, or any other issue, this sum will go back to you. Moreover, if you decide to buy the property, your downpayment will be reduced by the amount of the earnest money.
Additionally, if you really want to stand out and get your offer accepted in a seller's market, you can make your earnest money deposit nonrefundable. But, caution is advisable here. Only do so if you are absolutely serious about the house.
Shorten the inspection period or waive the inspection
During the inspection period, a licensed inspector checks the property's structure and systems thoroughly. It is also during this period that many buyers give up on the contract due to a poor inspection report. If you offer a 3-5 days' window for inspection instead of a 10-day window, the seller may deem your offer more attractive. Sellers are aware that if the inspection finds something problematic, their property will swiftly end up back on the market. Still, if you decide to shorten the inspection period, make sure you have an inspector ready.
Furthermore, you have an option to waive the inspection. But you have to be careful with it. The best scenario to do it is if you plan to renovate extensively.
Consider escalation clause
One thing that can undoubtedly propel you to the top of the list of desirable candidates is the escalation clause. It states that you will beat any offer by $1,000. Of course, you will set the limit up to which you are willing to go.
While this is an excellent way to gain a competitive advantage, you should know that it will work well when there are 3 to 5 offers. However, if there are many offers, an escalation clause can confuse the seller and do the opposite. In such cases, it's wisest to send your best offer for the highest price you are willing to pay.
The bottom line is you have to make your offer stand out. And you can do it in several ways. Of course, it mainly revolves around money. If you bid above the asking price, be ready to cover the appraisal gap. Moreover, consider offering more earnest money. Also, putting a higher down payment will signal that you are a serious buyer in a good financial situation. And above all, make sure you act quickly!
Once you win the bidding war and get your offer accepted in a seller's market, you can finally get a hold of those green moving supplies. But before that, make sure you have found the right moving company, one that practices sustainability, too. From there, everything will be smooth sailing.
Meta: If you want to get your offer accepted in a seller's market, you have to make it stand out. We will show you how to do it.
Men Shaking Hands · Free Stock Photo (pexels.com)