How to Compete and Win as a Buyer in a Seller’s Market
Sometimes, homebuyers wonder if it’s even worth trying to compete over homes in a hot seller’s market. When there is very little inventory in the market, it isn’t unusual for a single property to receive upwards of 20 offers. And only one buyer can win.
Nevertheless, it is almost always a good idea to write an offer anyway. So let’s discuss six tips to help make your offer outshine the rest.
1. Submit a large earnest money deposit. Pending home sales sometimes blow up. Sellers are often worried that once they commit to an offer, the winning buyer might back out of the transaction or default on the contract after all the other potential buyers have disappeared. An earnest money deposit speaks volumes to the sellers about your commitment as a buyer. And once the deal goes through, this money will go toward your down payment.
2. Show sellers that you’re qualified by presenting a loan approval letter. This letter is what we like to call “the golden ticket.” Almost every offer in a multiple offer situation will be accompanied by a lender letter. To stand out, ask your lender for a full loan approval letter. Being pre-approved is different than being pre-qualified. When you are pre-approved, the seller will essentially view you as a cash buyer. So make sure you undergo the pre-approval process before beginning your home search.
3. Give the seller time to move. Buyer possession is often a sticking point. It’s hard enough to juggle multiple closings when you’re buying and selling simultaneously, let alone when the seller on the other end of your transaction is doing the same. Cut the seller some slack and allow them to take a few days after closing to finish up their move. Doing so without expecting any compensation will help your transaction go much more smoothly. Also, before sealing the deal, it’s critical for you to have a home inspection. By federal law, you have 10 days to have the home inspected for lead-based paint. Tightening your time frame or removing related contingencies from your contract can help you stand out as a buyer.
4. Write a letter to the seller. Moving can be as emotional an experience for the seller as it is for the buyer. Writing the seller a letter can be an effective way to let them know how much you love the home. It can also be an opportunity to tell them about how you plan to care for the property.
5. Write your best offer from the beginning. Don’t hope for negotiation. In today’s market, you’ve got to offer your highest price and best terms right out of the gate. Make your offer attractive, whether that means offering a little above list price or using an escalation clause to ensure yours is the highest offer. You can also speak to your agent about performing a comparative market analysis, as sellers sometimes deliberately set their home below the price of comparable sales in order to generate multiple offers. Paying a little extra doesn’t necessarily mean you’re overpaying. What you may have thought was a high price may actually be market value.
6. Consider submitting a backup offer. If at first you don’t win, try and try again. Also, realize that about 24% of all accepted offers are going to fail. If a listing agent doesn’t accept your offer, then write an addendum to your offer using a secondary backup clause. The Wasatch Front MLS system includes backup statuses. This means Realtors have access to an entire database of sellers who are actively looking for backup offers. Of course, the success of your offer will also vary depending on the agent you work with. If you aren’t working with a buyer’s specialist, your chances of winning will be greatly diminished.
Our team has over 30 different strategies for helping buyers win in a seller’s market. We would love to apply to be your representative as you embark on your next home search.
So if you have any other questions, would like more information, or are interested in working with us to achieve your real estate goals, feel free to give us a call or send us an email. We look forward to hearing from you soon.