6 Ways to Make a Winning Offer in a Competitive Housing Market
The weather is warming and the spring selling season will soon be here, bringing more homebuyers competing for fewer homes. Homebuyers in competitive markets often need more than just money to get the home they want. They must be prepared to give sellers enough reasons to pick their offer over other buyers.
Here are six ways to make your home offer stand out and get selected:
1. Get prequalified for a home loan
Don’t start house hunting in a competitive market without getting prequalified for a home loan. Being prequalified will signify that a home loan lender has verified the buyer’s income and documents.
2. Personalize home offer by connecting with the seller
Submit a handwritten letter with the offer that lets the owner know how important their home is to your future. Buyers recently married or intending to start a family can say they look forward to raising a family there. A buyer purchasing a home suitable for multigenerational living, can say they want to be able to safely accommodate aging parents, and/or provide an environment where they can care for grandchildren while the parents are working.
3. Add an escalation clause to offer
Many inexperienced buyers assume that the offer phase allows for some negotiation. However, in a competitive market, the seller can request that all offers be submitted by a specific time and day, so they can review all offers together. Rather than counteroffer, the seller can simply accept the highest offer and reject the others without further negotiations. An escalation clause enables the buyer to place an offer with an escalation element of, for example $2000, up to whatever amount is acceptable to the buyer. The seller should be required to show other offers to the buyer if the escalation clause is triggered.
4. Order home inspection quickly
Have a home inspector lined up to do the inspection within a few days of the offer being accepted. In really tight markets, it might be worth getting an inspection before submitting the contract, so that the offer is not contingent on inspection.
5. Don’t require seller to make repairs
If the inspection report suggests repairs, such as a new roof or cracks in the foundation, apply for a renovation loan that finances the cost of repairs into the home loan. Renovation loan options, available to FHA, Conventional and VA applicants, enable the buyer to complete the repairs after closing with a contractor of their choosing, ensuring the repairs will be completed to the buyer’s satisfaction. (Currently VA renovation loans are not available in Texas.)
6. Be flexible on the closing
Offering to close at the seller’s convenience can seal the deal in a multiple-bid scenario. Buyers who offer to close quickly can edge out buyers who haven’t been prequalified or must first sell their current home. Alternatively, provide flexibility if the seller needs more time to buy a new home and move.
Ready to begin house hunting? Contact a Starkey Mortgage loan officer in your state to learn which home loan option best meets your financial needs.