What if I told you there are strategic ways to get your offer accepted during multiple offers? As the market shifts and the spring market is in full swing, certain locations and price points are seeing lots of activity (i.e., real estate hunger games). As buyers saturate the market, they have to be creative to make their offer stand out. Take note of a few top tips below:
Escalation addendum. When you add this language to your purchase agreement, it’s an effective way to show the seller you are serious yet attempt to tighten the ability to pay more than is needed. An escalation clause or addendum is a great resource when you know (or expect) there will be multiple offers. You start at your purchase price but agree to escalate your offer in increments up to a maximum price. Keep in mind the seller now knows “your hand,” but it can be a great strategy to ensure you stay competitive.
Contingency. Or lack thereof. The fewer contingencies, the better. And if there is a home inspection contingency, which is encouraged, a short timeframe is best. I may or may not pencil in a date and time with my favorite home inspector prior to submitting the offer so we can share this with the sellers.
Appraisal guarantee. This is where the buyer agrees to pay the difference in cash when the appraisal comes in lower than the purchase price. At a time when prices are increasing based on demand, yet the comps don’t support value, this can be a great proactive strategy. Also important to note to buyers, when you offer way over and it will not appraise at that amount, sellers are not rushing to accept your offer with realistic expectations. Adding the appraisal guarantee does exactly that, it provides a guarantee. Keep in mind you might want to provide a cap/max on the guarantee or you are going to have to guarantee no matter what.
No buyer closing costs. When the lender provides an estimate of the buyer’s closing costs and pre-paids, some buyers like to request for the seller to provide a credit toward the costs of closing so the buyer doesn’t have to bring money to the settlement table. Just keep in mind, doing that reduces their net proceeds, so if the buyer pays his or her own closing costs, the seller’s net proceeds increase. Most sellers are focused on that net so when a buyer pays his or her own closings costs, this makes for a very happy seller.
Settlement date. Most sellers want the highest amount in the shortest amount of time, but let’s not assume. Sometimes sellers need to find a replacement home, so a quick closing is not as beneficial as we think. Ask the listing agent prior to submitting the offer what the seller desires! As a follow up to the settlement date conversation, if the seller needs to sell by a certain date to ensure he or she has proceeds for the next sale, it might be helpful to provide seller possession where he or she closes on the property, but the buyer allows the seller to “possess” the home for a predetermined amount of time and then move out.
All strategies are general in nature, and you really need to reach out to a trusted REALTOR® to explain the pros and cons of each strategy as well as nuances that surround the execution. And this is just the top of the list; there are more effective strategies. Happy house hunting!