Multiple Offers in Seller's Markets
Sometimes home buyers wonder if it's even worth trying to compete against other buyers in a seller's market. When there is very little inventory on the market, it's not unusual for a seller to receive 20 offers. It's almost always a good idea to write an offer anyway. Here are tips to make your purchase offer outshine the rest:
Submit a Large Earnest Money Deposit.
Pending home sales sometimes blow up. Many sellers are worried that once they commit to an offer, the winning buyers might back out of the transaction or default on the contract after all the other buyers have disappeared. The earnest money deposit is part of your down payment. By increasing it above normal limits, you are showing the seller you are serious about closing. You're only offering the seller more money a little sooner than later, but it speaks volumes.
Show the Sellers You Are Qualified.
Almost every multiple offer will be accompanied by a lender letter. To stand out, ask your lender for a loan pre-approval letter, which is different than a pre-qualified letter. Being pre-approved makes you a stronger buyer in the seller's eyes.
Give the Sellers Time to Move.
Buyer possession is often a sticky point. It's hard enough to juggle multiple closings if you are selling and buying simultaneously, and even more difficult if the sellers are doing the same. Cut the seller's some slack by giving them two to three days to move out after closing, without expecting compensation.
Shorten or Waive Some Contingencies.
By federal law, you have 10 days for inspections due to lead-based paint, unless you waive that right in writing. Always get a home inspection, but tighten the time period. If your loan is solid, waive the loan approval contingency. Talk to your agent about comparable sales to decide if you want to waive an appraisal contingency.
Write Your Best Offer.
Don't hope for negotiation. Offer your highest price. Make it attractive, maybe a bit above list price. Ask your agent for a comparative market analysis to determine pricing. Sometimes sellers deliberately set a price below comparable sales in an effort to generate multiple offers, so paying a little extra doesn't necessarily mean you are paying over market value.