Buying a home can be challenging, even in sluggish real estate markets. Currently, the real estate market is booming across the country, with an inventory shortage and high buyer demand. If you’re a homebuyer, and you find that perfect house, you’ll likely be facing off against other buyers. Strengthen your real estate offers with these 10 tips and win that bidding war.
10 Ways to Get Real Estate Offers Accepted (Even in a Seller’s Market!)
This market is incredibly beneficial for sellers. High demand and low inventory are driving up prices in markets across the country. It can be extremely frustrating and deflating to make real estate offers as a homebuyer, knowing they might be rejected.
If you find a home you love, there’s a good chance that other buyers love it, too. You’ll have to work quickly and submit a deal the sellers can’t refuse.
1. Start with Your Best Offer
Most real estate agents will tell you that now is a crazy time in real estate. Buyers far outnumber available houses, making the market incredibly competitive. If you’re making real estate offers that aren’t attractive to the seller, you’re wasting your time and theirs.
Don’t sit around “thinking about it” or “considering your other options.” Sure, this is an important purchase – and you should do your due diligence to make sure it’s a sound investment – but waiting too long will likely cost you the deal. Instead, make your best and strongest offer up front. Do not expect counteroffers. If your offer isn’t strong enough, you can bet there are plenty of other offers the sellers can choose from.
2. Write a Personal Letter
Heartfelt appeals can be incredibly effective in real estate offers. While the selling price is a considerable factor, many sellers also have an emotional and sentimental attachment to their homes. If they’ve lived in the house for many years (or decades), they might want to ensure the house passes to someone who will treat it with care.
If you really love the house – and want to make it your home – don’t hesitate to write a heartfelt letter to the seller. This action just might be what tilts the decision in your favor in a multiple bid situation.
3. Show You’re Serious with a Larger Earnest Payment
One way to show the sellers that you’re serious about buying the house is to put down a sizeable earnest payment. An earnest check is a good faith payment made to the sellers (and held in escrow). Should the buyers fail to meet their end of the contract, the sellers would keep the earnest money and put their home back on the market.
A larger earnest payment indicates that the buyer is serious about the purchase. It’s a financial risk on behalf of the buyer, who will likely do everything in their power to make sure the deal goes ahead as planned. Of course, earnest money can be returned to the buyer should contingencies fail to be met, but this good faith payment is one way to show a buyer’s commitment to the process.
Typically, sellers will request an earnest payment of one to five percent of the home’s value. However, serious buyers might consider offering to pay a larger earnest payment, therefore strengthening their real estate offer.
4. Help with Closing Costs
During the home buying process, both the buyer and the seller will pay closing costs. The buyer pays multiple fees that typically add up to about 2-5% of the home’s price. However, the seller faces significant fees at closing as well.
Sellers typically pay commissions for both the buyer’s and seller’s agents, which can be a significant sum. It’s not uncommon for these commissions to total 6% of the home’s selling price, which is then split between the two agents.
As a buyer, you can sweeten real estate offers by offering to pay these real estate agent commissions or contributing to the cost. Even paying a portion of the agents’ commissions might be enough to put your offer ahead of the others.
5. Send Your Pre-Approval with Your Offer
We’ve talked about pre-approvals before (read more about their importance here). A pre-approval letter (not to be confused with a pre-qualification) shows that you can access the funding needed for a home purchase.
Including the pre-approval with real estate offers can show you’re a qualified buyer. You’re a much lower-risk buyer since a lender has already assessed your financial situation and determined you are a good candidate for a loan. The pre-approval lessens the chances that you will back out of a deal because of inadequate funding, which gives the sellers peace of mind.
6. Remove Contingencies Where Possible
Contingencies are nearly always part of real estate offers. Contingencies allow the buyer (or the seller) to back out of the deal for various reasons. These contingencies are included in real estate offers between both parties and include clauses like appraisal, financing, or inspection contingencies.
Removing or reducing these contingencies might make the sellers more apt to accept your offer. For instance, if you include an inspection contingency, consider adding a clause stating you will only ask for repairs over a certain dollar amount. Or have your real estate agent write in a clause protecting the seller in case the home doesn’t appraise for the offered price.
While there are certainly some downsides to removing contingencies, it is possible to negotiate with the seller to make the deal worth their while.
7. Add an Escalation Clause
When real estate is hot and homes are under contract within days or hours, it might be time to break out some unexpected tools. One such tool is an escalation clause. This clause attaches to your initial offer but agrees to increase the offer should the seller receive a better offer from another party.
For instance, your initial offer might be $300,000, with a conditional escalation clause. This clause might state that should the seller receive an offer higher than $300,000, you will be willing to increase your offer to $315,000.
The risk, of course, is that you have revealed your top price. The seller could use this information to counteroffer at your higher price rather than accept your initial offer. However, this could be a useful strategy in multiple bid situations as it protects you from missing out on a deal simply because another buyer offers more.
8. Make It a Cash Offer
Sellers (and their agents) love cash real estate offers. Cash is king, as the saying goes. And when it comes to home buying, a cash offer makes the entire process incredibly easy. The seller doesn’t have to worry about buyer financing falling through. Appraisals and inspections become less of an issue (or maybe not an issue at all, depending on the buyer’s terms). And because the buyer doesn’t have to wait for underwriting and loan approval, cash deals can close incredibly quickly.
Not everyone has the capital to make a cash offer, but if you have the means, a cash offer might be the strongest chance of winning the bid battle.
9. Add Some Incentives to Make the Sellers’ Lives Easier
Selling a home is incredibly stressful. As the buyer, anything you can do to decrease the seller’s burden will help. That said, you can strengthen real estate offers by adding incentives for the seller.
These incentives might include paying for cleaning or roll-away dumpsters to help with the move-out process, offering to let the sellers stay for a short time after closing, or working with the sellers to meet their schedules or needs. Get creative: your real estate agent can give you more suggestions on bolstering your offer with incentives the sellers can’t turn down.
10. Work Quickly
In a seller’s market, timing is everything. It’s not uncommon for sellers to receive multiple offers within days or even hours of listing. If you’re a serious buyer – and you find the home you just can’t live without – you will need to act quickly. If you’re nervous about putting in an offer before thinking it through, your real estate agent can include contingencies that will protect you in case the home isn’t as perfect as it seems.
Home buying in a seller’s market can be challenging. These tips can help you strengthen real estate offers – and just might land you the home of your dreams. Happy buying!