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7 Tips for Submitting a Competitive Offer on a House



Buying a home in a hot market? Use these strategies to help your offer stand out from the rest and increase your chances of winning the bid.


1. Offer above asking price.

When you’re likely to encounter a bidding war, offering above list price is table stakes. Work with your real estate agent to determine how high you should go so you don’t exceed your budget. If you’re concerned about that happening, search for homes below your ideal price range, so you can wow the seller when you come in with a high bid.


2. Offer additional earnest money.

Your earnest money is a good-faith deposit indicating you’re serious about buying the home. Increasing the amount of earnest money you put down conveys that you’re very serious about wanting the home. And you’re not actually paying more because the extra cash will go toward the home’s purchase. Or, if the seller terminates the deal, you’ll get the money back.


3. Waive the inspection contingency.

Waiving the inspection can be a risky move on your part, but it can really help seal the deal. Typically, findings from the inspection would be reported to the seller, and agreed-upon repairs would need to be made before the deal could close. Depending on what issues are found, the seller could end up spending thousands of extra dollars in order to sell the house. Waiving the inspection sidesteps this issue altogether because you’ll accept the property “as-is.” Keep in mind that even if you waive the inspection contingency, you still have a right to an inspection, which may be a wise choice as it will tell you what repairs you’ll need to make once you take possession of the home.


4. Waive the appraisal contingency.

Getting the house appraised ensures you’re not borrowing more than the home is worth. When an appraisal contingency is included in the contract, if the house doesn’t appraise for the agreed-upon price, the seller will need to accept a lower amount, or you can walk away from the deal. That’s a big gamble for the seller, especially in a market where homes are selling for a premium. By waiving the appraisal contingency, you agree to pay the contracted price even if the home appraises for less. In that case, you’d need to ensure you have cash on hand that you can bring to closing to cover the difference.


5. Be flexible with timing.

Chances are, the person selling their home is simultaneously trying to buy a new home. Timing those two things perfectly can be tricky, and they may need extra time to find their new home before vacating their current one. To sweeten the deal, you can offer a flexible closing date that suits the seller’s timeline, or you can offer a leaseback option in which the seller leases the house from you and continues to occupy it for a specified period after you’ve closed.


6. Use an escalation clause.

So you’ve put together the shiniest, most attractive offer you could think of. But what if someone else comes along and outshines you? An escalation clause can be your secret weapon. By including one, you’re promising to outbid the seller’s highest offer, not to exceed a certain amount. For example, let’s say your offer was $275,000, and it includes an escalation clause stating that you’ll pay $1,000 above the highest bid, not to exceed $285,000. Two other buyers submitted offers for $278,000 and $280,000, which means you’d pay $281,000 — or $1,000 over the highest offer.


7. Make it personal.

Buying and selling a home is an emotional process, and sellers don’t always base their decisions on numbers alone. Writing a heartfelt note about why you love the house or the neighborhood can create an emotional connection that motivates the seller to choose you. Perhaps they have a gorgeous backyard and landscaping that they’ve put a lot of work into; you might comment on how you’re looking forward to entertaining guests in the lovely outdoor living area. Just be sure the details you choose to include don’t violate fair housing laws, such as disclosing your familial status or religious affiliation. Talk to your real estate agent for more details.


 

Remember to get pre-qualified for a loan before you make any offers. With a pre-qualification letter in hand, you can show the seller that you’re able to afford the house and are ready to move quickly. Contact us to get started!

 

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