As home prices continue to rise and inventory levels drop, the competition for the best deals and the best houses can get tough. According to Trulia’s recent Trends report, prices are up 8.1% nationally. Price increases continue to be widespread, with 97 of the top 100 largest metros posting year-over-year gains. In this hot market, where inventory of affordable homes can be very limited, more buyers are fighting for fewer homes.
In this scenario, making a perfect offer is key to getting that dream home.
Here are eight ways to make your home offer stand out:
1.Cash Is King The bottom line is this: if you can buy with all cash, you will win out over other offers with mortgage requirements. This may sound like a lot to try and scrap together, but many people do. In fact according to NAR, 43% of all homes deals in 2014 have been 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 to worry about.
2.The Next Best Thing To Cash: A Pre-Approval Letter – A pre-approval letter is confirmation from your mortgage broker or bank that you’re good for the money needed to buy the home. Being pre-approved for a set amount means that the lender pre-approved you for a loan, in essence turning you into a virtual cash buyer, as mortgages are harder to come by these days. It tells a seller that you are not only qualified, but prepared and serious about making a deal. Someone may be offering to pay more, but if they aren’t pre-approved, you’ll have the leg up.
3.Pre-Qualification Opens The Door, Too Being pre-qualified is not as powerful as being pre-approved, but it is still useful in the offer-making process. It’s an informal, albeit professional, assessment that basically says you’re in good shape financially—but it is non-binding. Always try to get a pre-approval letter, but settle for a pre-qualifying letter if you have to.
4.Timeline Flexibility Closing is generally 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. A seller will generally want a fast closing, usually 30 days. If you have all your ducks in a row, you may be able to do this. However, what if the house they are moving to won’t be ready for 60 days? Find out what they need, and then give it to them. I’ve seen many deals sealed over this concession.
5.Tighten Up On The Inspection Contingency I’ve heard other experts give the “tip” to forgo the inspection contingency to make your offer more attractive. Here’s my advice: NEVER give up this one. After your inspection, you give the seller your list of problems, current and potential, along with the opportunity to fix them, make a price adjustment, or give you a credit back. If the seller does not agree to any of your requests, you can walk. You take a huge risk if you wave this. A much better option is to tighten up the timeline and offer to do the inspection in the first few days after opening escrow and to give a response to the inspection results in a few days turnaround.
6.Contingent Upon Financing This is another contingency you should never omit in your deal, unless of course you are paying all-cash. With most 30-45 day closings, you will usually have 17-21 days to get your mortgage approval. Having that pre approval letter will make this finance contingency less of an issue for your seller.
7.Contingent Upon Appraisal It’s very possible that the house may not appraise for what you have offered to pay. However, if you’ve done your homework and are comfortable with the price you’ve offered, then you might consider waving this one. The downside is that you’ll have to come up with the difference under the negotiated sales price. Waving this contingency gives you a leg up over the competition, especially in a hot market where the seller is trying to get top dollar.
8.The “Please Let Me Buy Your House” Letter If you’re not a “thank you note” writer or a believer in the power of a hand-written note, you may be thinking this is too cheesy to work. However, a home seller friend of mine had three similar offers on the table. Two of the offers came with very heartfelt letters. He was actually put off by the buyer who didn’t send a letter because the others did—and he sold to one of the letter writers. Writing a letter may not get you the deal, but if you are the one offer that doesn’t, it could lose it. Consider this: home selling is an extremely emotional process, especially for people who have lived in their home for multiple decades, raising their families there and making many, many memories under the roof. By telling them why their family home would be special to your family, you could pull at their heart strings…and get the house!