Home prices are continuing to rise in 2017, and inventory in many areas is shrinking. If you are a first-time house buyer in a tight market, you may have many people bidding on the same house you are.
How do you make your offer stand out and to be the strongest among them all?
Here are six ways to make your offer stronger so that you can get to the closing table for your dream home:
#1 Get the Seller to Know and Like You
This is a very effective way to make your offer stand out that many people don’t realize. Sure, the top bid stands out because money talks, but don’t forget the human and emotional side of the transaction.
Some experts recommend that you let the seller know why you like the home and why you want it to be home for you for years to come.
In a hot market where your bid as the first-time house buyer may not be the highest, you can write a letter to the sellers. Tell them that you want to live in that beautiful home and why it is. For example, you might say that you love the family room and look forward to spending time there with your children.
And don’t email the seller. Send them an old fashioned, handwritten letter or card. You can bet that in most cases, very few people making offers are going to send a letter to the sellers. You will really stand out.
#2 Don’t Ask for Repairs and Get an Inspection Fast
When you are in a multiple offer situation, don’t gum up the works by asking for two weeks to inspect the property. This is a multiple offer scenario, and you do not want to delay things.
Many experts contend that there is no need to go beyond five days to get the home inspected. You may be able to get the home inspected immediately before you submit the offer.
You also can make your first-time buyer offer more attractive by putting in an ‘as is’ contingency in the contract. This means that you are not going to ask for any repairs. If the inspector does find any problems, the buyer has the choice to take it or walk away.
#3 Make a Non-Contingent Offer
The typical home purchase contract is contingent upon financing and appraisal. This gives the buyer the right to get their deposit back if the appraisal does not support the asking price, or if they are not approved for a first time mortgage program.
For a homebuyer with a mortgage, waiving contingencies can improve the odds of getting the home if you are dealing with cash buyers, but there is risk to it.
An offer that has no contingencies is a cash offer. It is not recommended unless you have the cash to afford it. If you decide to do this and need a mortgage, be sure that you are working with a mortgage lender who you know and who knows you. You need to know that the lender will deliver so you don’t end up in court. In many cases, the seller may be weary of accepting an offer from buyer holding being financed by a first-time home loan with bad credit scores.
You also can make the offer not contingent upon the appraisal. So, if the home does not appraise for the asking price, the buyer has to pay the difference in cash. This is not a good idea for the first-time buyer who does not have sufficient cash reserves to make up the difference.
#4 Put an Escalation Clause in the Offer
Many home buyers think they can save their highest offer for the end game when the seller counters. But sellers can just accept the highest offer and reject other offers.
A way to get your offer to stay in consideration is to put an escalation clause in the offer.
This means if you place an offer, the offer is for X amount, but the clause states that you will enhance the offer by X over any other bid up to a certain amount.
This is a safer way to make your home buying offer stick out from the crowd because it shows you will pay more, but you are not risking offering more than is needed.
#5 Get a Pre Approval for a Conventional Loan
In some instances it is best to have a pre-approval mortgage letter for a conventional loan, as there is more of a stigma involved with a FHA mortgage lender. In reality, FHA loan qualifications are seldom more complicated than a conventional loan, but it remains that some home sellers prefer to see conventional financing. It also can make the home seller feel more confident if you are coming in with a higher down payment.
#6 Have A Settlement Date That Works for the Seller
Every home seller has a different situation. Some may have a job waiting in another city and need to settle on the house next week. Others may be retirees who are not in a rush and can wait a couple months to settle.
You can talk to your agent who can ask the seller’s agent what the sellers need in terms of a settlement date. If you make yourself as agreeable as possible with the needs of the seller, this can make your offer stand out.
The Bottom Line When Making an Offer
If you follow the above six first-time buyer guidelines, you will be able to make a strong offer on the home, and you should be able to move into your dream home soon!
References Make Home Offer Stand Out. (2013). Retrieved from http://www.bankrate.com/finance/real-estate/make-home-offer-stand-out-1.aspx