With shrinking inventories, many home buyers are finding only competitive offers will win them the house they want. A recent article by Kiplinger’s Personal Finance highlighted several ways that home buyers can make more competitive “irresistible” offers.
About three or four months before home buyers even shop for a home, they should review their credit reports to make sure they’re accurate and take short-term steps to improve their credit score. Without lender’s preapproval, your offer is pretty much useless.
Buyers may only get one chance to get the home they want in a competitive market. They may not get a second try to sweeten the deal later, so a lowball offer the first time around could cause them to lose out. Buyers should use sales prices of comparable properties in the neighborhood to submit their best offer the first time around.
Consider an escalator clause
These purchase contract clauses are becoming more popular again. This is when the buyer agrees to increase their offer if there’s a higher bid from another buyer.
Add earnest money
The extra deposit can show sellers how serious the buyer is. Some buyers may even double the amount that the seller requests to show their commitment in purchasing the home. In today’s market, the earnest money is normally 1% of the purchase price. Double your earnest money amount will make your stand out of competition.
Keep contingencies to a minimum
Sellers prefer no contingencies, but buyers want to protect their interests too. Offset a financing contingency with preapproval and a strong earnest money deposit help. But when it comes to multiple bids and competing with cash buyers, you might want to consider waive appraisal contingent or temper an appraisal contingency by assuring sellers that if the appraisal comes in lower than the purchase price, you’ll pay the difference or split it with the seller.
All offers presented through the buyer agent and listing agent to the sellers. Tell your agent how much you like the property and how serious about your offer. Ask your agent to present the offer not just professionally but personally. Say something like you really like … part of the property, … of the neighborhood, the style of … and so on. It helps to achieve a “meeting of the minds” before your offer is being considered favorably. Remember you are buying something you like and not something you could criticize for less. That WAS the buyer market tactics, which is no longer valid in today’s market.