Tips on how to make a competitive offer on a house
In a competitive market, a new listing can have twenty or more offers in the first few days. Because of this, it is important that serious buyers know how to make the best offer possible in order to be competitive. The following five tips can help you make a competitive offer to beat out other potential buyers on your dream home.
- Get pre-approved
Including a verified pre-approval letter with your offer shows that you will be able to secure the necessary financing to purchase the home. If you plan on purchasing a home in cash, include a proof of funds.
- Offer a competitive price
One of the first things sellers look at on an offer is price. While some may be willing to negotiate, others are often firm in how much they want to get for their homes. If a home has only been on the market a few days, the seller is less likely to be willing to negotiate on price; if a home has been listed for several months, they may be more receptive to a lower offer. In a competitive market, be prepared to offer asking price – if not more – to have your offer be seriously considered.
- Minimize inclusions and contingencies
If the listing specifically stated no appliances are included, asking for them to stay in your offer is a sure fire way to have it rejected. Likewise, minimize contingencies to give yourself the best chance in a multi-offer situation; eliminating the financing, inspection, or sale of current home contingencies is one way to sweeten a deal and help your offer get selected.
- Increase earnest money
Earnest money is the standard way of letting a seller know you are serious about purchasing their home. While some markets accept a standard earnest money offer of $500-$1000, in others it is usually 1-3% of the value of the home. As there is little risk of loss, increase the amount of earnest money to help your offer stand out; if your offer is approved, the money goes towards the purchase of the home, and if your offer is rejected you get the earnest money back.
- Add personal touches
In a multi-offer situation, a few personal touches can help your offer stand out. If possible, ask your agent to present the offer in person; a smile, handshake, and quick summary of why you want the house leaves a much stronger impression than an email or phone call. Can’t make the offer in person? Include a letter to the sellers including a little about you and your family and detailing what you love about the home.