When more buyers are looking for homes than there is inventory available for sale, it’s a seller’s market, and sellers tend to have the upper hand in negotiations. Properties are likely to sell quickly, and sometimes a situation ensues in which a home has multiple offers placed upon it simultaneously.
If you’re looking to buy a home in a seller’s market, you might find yourself with stiff competition when you prepare to make an offer. So how do you make your offer stand out as the most attractive when the seller has more than one offer on the table?
While at first it seems intuitive that the winner of the bidding war will be the buyer who offers the most money, there are other ways that you can make your offer attractive to a seller. Here are a few other types of leverage you might use to craft a winning bid:
Avoid making a lowball offer. As tempting as it is to get a “deal” on a new home, a seller’s market is hardly the time to do so. As long as you (and your real estate agent) feel that the listing price is a fair reflection of the home’s worth, avoid temptation to save a few thousand dollars off the asking price by putting in a low bid – or you will likely be outbid at the start.
Show you can be flexible. There are many ways you can do so, from being accommodating about the timing of the closing or the seller’s move-out date to avoiding nitpicking on a home inspection. Earn the seller’s interest and trust by showing that you can be cooperative and undemanding.
Let your money do the talking. While you may not have the means to offer thousands of dollars over asking price, maybe you have something else you can work with on the financial side of things. Offering a large amount of earnest money up front or proving that you can make a sizable down payment will show the seller how serious you are.
Be ready to seal the deal. It takes longer to be approved for a mortgage loan these days, so if you’re thinking of starting a home search, you should seek financing preapproval from a lender immediately. Having a preapproval letter ready to go when you make your offer will show a seller that you have the backing to close on the deal. Put in an offer without this backing, and you may lose out to someone who has pre-approval in hand.
Be ready for counteroffers. A seller may come back to you with a counteroffer, and you’ll want to be ready to make a decision about whether you can meet the offered terms. What is your absolute limit in terms of purchase price? Are you willing to waive certain contingencies? What about paying for small repairs that turn up during a home inspection rather than asking that the seller be responsible?
As always, consulting with your real estate agent can make the negotiation of a sale move along more smoothly. Your agent will have the experience to make recommendations about crafting an offer that has the best chance of beating out the competition and landing you in the home that you want.