Delivering a perfect offer is key to getting your dream home.
As home prices continue to rise and inventory levels drop, competition for a great deal on a home can get tough. According to Trulia’s recent Trends report, prices are up 8.1% nationally, and the climb continues to be widespread, with 97 of the top 100 largest metros posting year-over-year gains. In a hot market, the inventory of affordable homes is limited, and more buyers are fighting for fewer homes.
In this scenario, making a perfect offer is key to securing your dream home.
Here are eight ways to make your home offer stand out:
1. Cash is king
If you can buy a home with a full-cash offer, you will win out over other offers with mortgage requirements. This may seem like a daunting prospect, but according to the National Association of Realtors, 43% of homes purchased in 2014 were purchased with all cash. Savvy sellers know the benefits of an all-cash buyer. There is no issue involving mortgages, the escrow closes faster, and there is no appraisal requirement.
2. The next best thing to cash: a preapproval letter
A preapproval letter is confirmation from your mortgage broker or bank that you’re able to borrow the money necessary to finance the home. Preapproval for a specific dollar amount indicates you are able to obtain the loan. While not the same as a cash offer, the loan has essentially turned you into a virtual cash buyer, as mortgages can be difficult to secure.
It shows a seller that you’re not only qualified but also prepared and serious about purchasing their home. Another buyer may offer to pay more, but if they aren’t preapproved, you’ll have the leg up.
3. Prequalification opens the door too
Being prequalified by your lender is not as powerful as being preapproved, but it’s still useful in the offer-making process. It’s an informal, albeit professional, assessment indicating you’re qualified financially — but it is nonbinding. Always try to get a preapproval letter, but settle for a prequalifying letter if you have to.
4. Timeline flexibility
Closing generally takes place within 30, 45, 60, or 90 days. Customizing the length of the closing to suit the seller’s needs can often seal the deal over a higher-priced offer. Unless there are extenuating circumstances, a seller will want a fast closing, usually 30 days. But if their new house won’t be ready for 60 days, determine their needs and try to accommodate them. I’ve seen many deals sealed over this concession.