To say that the current real estate market is crazy is an understatement. The market is great if you are looking to sell your home, but it is not so great for those that are trying to purchase a home right now. It may be very intimidating to see that homes are going under contract in just a day or two, usually with multiple offers, and over asking price. Before the pandemic, a clean, full price offer was what it took to get the home of your dreams, but currently, agents are needing to dust off their contract writing skills to get their client’s offer won. It is not just about offering a higher purchase price, although this can absolutely help. Now the terms of the contract are being utilized more than ever to make your offer stand out against your competition.
Here are five ways that I can help you construct a competitive offer.
1. Reduce your number of contingencies.
In a typical contract there are a number of contingencies that need to be met in order for a contract to go to the closing table. Things such as a financing contingency, home inspection, and appraisal are all normal terms in real estate contracts. Dropping off some of these from your offer can make it look more appealing to the seller.
2. Offer a short close.
What we have typically seen in the past, is a 30 day close from the date the house goes under contract. Try getting pre-approved, starting the loan process early, or going through a lender with a reputation for closing fast. If you are able to offer a shorter closing period, this can help you stand out from the competition.
3. Put down more earnest money.
Gone are the days when earnest money just needed to be 1 percent of the purchase price. Now the stronger earnest money deposit you have, the more faith a seller has that you are serious about purchasing their home. Non-refundable earnest money is even becoming more common, meaning that if your deal falls through, you guarantee the seller that they can keep that deposit.
4. Rent back the home.
With the market the way it currently is, it is hard for sellers to find somewhere to live once their home is sold. Because of this, buyers are offering to rent back the home to the sellers for a few months while they look for a new home. If you are able to do this as a buyer, it could be the difference that gets your offer accepted.
5. Add an escalation clause.
Adding an escalation to your offer means that you will outbid any other offer, up to a maximum amount. So you tell the seller you will pay X amount for the home, but if another offer comes in higher, then you will pay X amount over their offer. If a bidding war is taking place, this will keep your offer stay at the top of the list.
As an agent, I have many tactics to help you get your offer accepted. Don’t let this current real estate market discourage you from purchasing your dream home. Remember, I am here to answer all your real estate questions.