In a competitive seller’s market, buying a home can seem hopeless. You’ve put in offer after offer and haven’t been able to secure a home. We’re here to tell you that there may be ways to increase your bidding changes! After talking to some of our Real Estate Agent Partners, we’ve compiled a list of things they want you to consider that may increase your chances of getting your dream home.
1. Offer Above-Asking Price
Making an offer above the seller’s asking price may put you in a better position to beat out a multiple-bid
situation. While this may seem daunting, sometimes you only need to offer $2,000-$3,000 more to get the seller’s attention. This will show the seller you want them to consider your offer as a potential buyer and that you are serious about buying the home. Ensure you are keeping your offer aligned to the home’s value, while still above the asking price, to help you secure the home you’re interested in.
2. Escalation Clause
An escalation clause is a provision added to a contract stating that the buyer will automatically escalate their offer a certain amount above the offer prices of competing offers submitted. There is typically a maximum escalation amount included in the clause. This approach may help keep your offer at the top of the list during a bidding war.
Here’s an example:
- Homebuyer “A” has offered $300,000 on a $290,000 home, with an escalation clause to $2,000 above the highest bid.
- The house gets 20 offer contracts, and the highest bid is from Buyer B at $340,000.
- As a result, buyer A’s contract sales price is automatically escalated to $342,000.
This approach is considered the most common method used to outbid the competition in a highly competitive market.
A leaseback allows the seller of a property to lease it back from the buyer after closing. It can be risky to move out of your primary residence before the transaction has been fully funded and completed, since some deals may fall through. This tactic allows the seller to sell their home and then move out afterward, which eliminates this risk.
4. Earnest Money
Earnest money is compensation offered to the seller so they will take their house off the market. In the state of Florida, this is usually 1%-2% of the selling price. Buyers may be able to receive their money back for different reasons with a contingency.
Offering more earnest money than the standard amount will show you are very interested. If you want to receive your earnest money back, should the deal fail to close, you can make your earnest money “go hard”.
5. Offer to pay the Seller’s Moving Expenses
If you are making an offer on a home that is currently occupied and has multiple buyers on the list, offer to pay the moving expenses of the seller to make your offer stand out. This method is beneficial because the payment of moving expenses is not included in the appraisal or mortgage process, but will still benefit the seller financially.
6. Waive the Inspection Contingency
When a home goes under contract, it must then receive a home inspection. Sellers must wait to receive an inspection of the home to report the results to the buyer. Buyers can offer to waive the inspection process but should perform plenty of research prior to making this offer as it can be very risky.
7. Larger Down Payment
When making an offer on a home, consider a higher down payment to show the seller you are serious about the home. If you have more money to contribute for a down payment, you may consider increasing this amount to show the seller that you are a financially secure buyer. If you are using a VA loan with no down payment required, you should consider a contract that shows you have extra cash to make the deal. Sellers want a buyer that has a high chance of closing the transaction.
8. Use a Reputable Mortgage Lender
One of the first steps taken when an offer is received from a buyer is a verification of the mortgage lender by the listing agent. Oftentimes, listing agents are familiar with mortgage lenders and will know whether or not they are reputable and will provide this information to the seller. Experienced real estate agents can offer advice for finding the best mortgage lenders who will help your offer get accepted. Christensen Financial Inc is a “direct lender”, meaning that they do not act as brokers and they control the approval process in-house.
8. Get Pre-approved For A Loan
When buying a home, using a reputable local lender who will pre-approve your loan may give you a better chance of closing a deal. This shows the seller you have been thoroughly vetted and have a higher chance of closing. You can get started on your pre-approval process with us today!
As a homebuyer in a competitive market, you may experience stress and pressure each time you put in an offer. We hope this list will help you feel more empowered the next time you make an offer on a home. If you stay persistent and work with a trusted real estate agent and Loan Officer, your dream of homeownership may come true.