In today’s market, even with the recent changes, sellers still have the upper hand. Any offer you put in needs to be as competitive as possible, so you have a higher chance of being accepted. Use the steps here to make sure you’re making a competitive offer that has a higher chance of being accepted by the seller.
Many people who look at homes have received information about how much they might qualify for, but they’re not qualified. Being pre-qualified makes a huge difference, as it shows the seller you’re serious about what you can borrow to pay for the home. Make sure you’re pre-qualified, not pre-approved, so the seller knows you’re already working with a lender and the closing process can proceed a little bit faster if they do sell the home to you.
Offer More Earnest Money
Earnest money is money provided before the closing to show the seller that the buyer is serious about purchasing the home. This amount of money protects the seller in case the buyer ends up backing out of the sale. If the closing goes through, the earnest money is put towards the purchase of the home. There is a risk for the buyer if they may back out of the sale, but if you’re serious about buying the home, providing earnest money or a little bit more than the average amount could show the seller you’re ready to buy.
Minimize or Eliminate Contingencies
Make sure the offer is clean, which means it doesn’t include contingencies or seller concessions. Contingencies are anything that has to happen before the home can be purchased, like inspections or the sale of your current property. Seller concessions are things the buyer asks for, such as help with closing costs. If it’s possible to avoid most contingencies and seller concessions, the offer will be far more attractive to the seller and they’ll be more likely to accept it, especially if other offers include a variety of contingencies.
Choose a Competitive Offer Amount
Consult with the real estate agent and consider an offer amount that’s as competitive as possible. If the offer is denied based on the amount, be ready with a counteroffer, if possible. Always keep the budget in mind and avoid offering over budget. Sellers today have fewer buyers to choose from compared to a year ago. Work on a competitive offer with your realtor and follow our other tips here to improve your chances.
Consider an Escalation Clause
Escalation clauses aren’t very common today for the housing market but this can be a very good way to make a competitive offer. With this, you’ll make an offer with the desired amount, but add in a clause that can automatically raise the offer to a certain amount. This does need to be done carefully to avoid the seller seeing the full amount you’re willing to pay and it’s a good idea to be careful with how high of an amount you’re willing to pay since it’s not a good idea to purchase a home owing a lot more than it’s worth.
Avoid Asking for Extras
Make sure you discuss what extras you should ask for with your realtor. Try not to ask for more than would traditionally be included with an average offer. It’s possible to ask for furniture and other items in the offer and be willing to pay extra for them, but the seller may not be interested. If there’s another offer that’s similar in price, but that doesn’t ask for the extras to be included, the seller will go for the other offer. Take note of the issues with the home prior to purchase and decide which are things you are willing to live with or repair after closing.
Offer Something to the Seller
Depending on the offer and the current market, it may be a good idea to offer something to the seller to make the deal more attractive. This could include a month of free occupancy or any other help the seller might appreciate. Be careful if you offer occupancy, however, as the agreement needs to be in writing and you should have a lawyer review the agreement before signing.
Making an offer on a home in today’s market isn’t easy and there’s a lot that you can do that will inadvertently make your position worse. Instead, follow the steps here to make the best offer for a home, so it will most likely be accepted by the seller. Always stick with your budget, but by using these steps, you can make a more competitive offer without worrying about how to come up with the extra funds.