Are you wondering how to get an offer accepted on a house in today’s highly competitive market? You’re in the right place!
Many housing markets around the country are seeing scarce inventory and a lot of competition for available homes. If you’re in a hot seller’s market, simply offering the asking price may not be enough to get you into a home.
And if you’ve found the home of your dreams, well, you’ll need to go above and beyond to make sure you’re the one coming to the closing table. From getting loan pre-approval to making a cash offer, here are the tips that will help you get into the perfect home for you and your family.
Get Loan Pre-Approval
Getting pre-approved for a home loan shows realtors and buyers alike that you’re serious about purchasing a home and that you have the financial means to do so.
To get pre-approved for a home loan, file a loan application with the lender of your choice. They will give you a pre-approval letter, which you should submit with your offer.
Work with an Experienced Realtor
You don’t technically need a realtor to buy a home, but you’re going to have a hard time navigating a bidding war without one. Besides, realtors know the local real estate market and have the expertise to guide you in making the right financial decision.
They’ll know which homes are overpriced, for example, or what the red flags are in a given neighborhood. They also have the experience to help you put in a winning bid.
Offer an Escalation Clause
Adding an escalation clause to your offer means that your offer will automatically outbid any other offer up to a certain price.
So, if you make an offer of $475,000 on a home with an escalation clause of $2,000 over competing bids up to $550,000, and someone else puts in a bid of $500,000, your offer will automatically escalate to $502,000, outbidding the other buyer.
However, if someone were to bid $550,000 or more, your offer would not escalate further. That said, an escalation clause can make all the difference in active seller’s markets like the Charlotte, NC real estate market.
Make sure you talk to a real estate lawyer about adding an escalation clause to your offer.
Make a Bigger Earnest Money Deposit
In most states, you’re required to put down an earnest money deposit of one to three percent when you make an offer on a house. This is to keep buyers from placing offers on multiple homes or pulling out of a deal without good reason (such as defects uncovered during the home inspection).
Your realtor will hold onto your earnest money deposit in escrow and either refund it to you after closing or put it towards your down payment, depending on your state law.
A bigger earnest money deposit sends the message that you really want the house, and more importantly, that you’ll do everything you can to ensure the deal closes.
Write a Homebuyer’s Letter to the Seller
A homebuyer’s letter to the seller is a document that attempts to sway the seller to accept your offer by explaining how much the house will mean to you and your family.
Most people are emotionally attached to their homes, even if they have to sell because they’re upgrading, downsizing, or leaving the area.
Many sellers would rather their home go to a family that will love it as much as they have, instead of a landlord or a faceless corporation. Write a homebuyer’s letter and encourage every member of your family to include a message discussing their hopes and dreams for the home.
Don’t forget to mention parts of the house you especially like and how you envision those aspects making the house a home for your family.
If you can make a “clean offer,” that is, one without contingencies, you’ll stand a better chance of getting your offer accepted. A clean offer shouldn’t be contingent on the sale of your current home.
If you can afford to take the risk, you could even waive the home inspection contingency. You should also avoid asking for seller concessions or for the seller to include personal property, like appliances that they have added to the exclusion list, in the sale.
Offer More Than the Asking Price
In most sellers’ markets, you’re going to need to offer more than the asking price to get into a home. The good news is that, in many cases, you only need to offer a few thousand more to get the attention of the seller.
Make a Cash Offer
A cash offer means you can close sooner, and you won’t have to worry about the home appraising for your loan amount because you won’t have a loan. Sellers are usually more interested in cash offers because they can complete these deals quickly, and they tend not to fall through as often as financed offers.
You’ll be able to avoid the closing costs and interest charges that come with a mortgage loan, and you’ll have more control over the transaction and the closing than you would if you were taking out a loan.
Getting an offer accepted on a house isn’t always as straightforward as it might seem, especially in a seller’s market. Make your offer more appealing than the rest, so you can close on the home of your dreams.