Do Know What You Want And Move Quickly
The current real estate market is on fire. If you find a home that you love, you have no time to waste. Most homes are only on the market for a few days (if they make it on the market at all) and almost all are receiving multiple offers. You need to be ready to move quickly and aggressively if you want to find a home in this market.
Do Hire an Excellent Realtor®
You need someone who knows and understands what it takes to find you a home and win out in a multiple offer situation in this super competitive market. Your Realtor® needs to be able to help you find homes that will meet your needs and help you understand what it will take to compete in this aggressive market.
Do Get PreQualified With A Stellar Local Lender
Your choice of a lender can often be the difference between having your offer accepted or having your offer rejected when it’s one of many. A seller needs to know that a buyer is financially qualified to purchase a home and that the lender will get the loan package done for an on time closing. An excellent lender will not just do a credit check and say you’re ready to go, but will actually have you submit all necessary documentation, put your file through desktop underwriting, and in some cases have a full loan commitment ready for you. At that point, all you need to do is find a home and they will quickly be able to move you through the loan process. Good lenders will also call the listing agent once your Realtor® submits your offer and assure them that you are a well qualified buyer and that they will work hard for a smooth transaction with an on time closing. The more upfront work you put into working with a solid lender, the stronger your offer will be.
Do Submit Your Highest And Best Offer
In this market, there is little (if any) room for negotiations. With almost every home receiving multiple offers, you need to assume that you will only have one chance at submitting your highest and best offer. Only you know what price and terms are acceptable to you. Make your offer one that if it’s not accepted, you will walk away knowing that you gave it your best and that you were not willing to do anymore.
Do Show That You Are In A Strong Position Financially
Without tipping your hand by submitting a pre-approval letter with an amount that’s much higher than the offer you are making, you can still show a seller that you are strongly qualified to purchase their home. You can put down a large Earnest Money Deposit (aka good faith money). While somewhere between 1% and 3% of the sale price is traditionally what buyers offer, putting down as large of an earnest money deposit as you comfortably can will make your offer stronger than many. Also, if you are making a downpayment on your loan, a large downpayment can show that you are in a strong financial position. If you are using a zero money down loan, like a VA loan, stick with the large earnest money deposit to show your financial strength. This is another situation where a great local lender will be able to assure the listing agent that you are in a great position financially to afford the home that you are buying.
Do Limit Or Waive Contingencies
You want to make your offer as clean and as appealing to the sellers as you can so that they will choose your offer over all of the others. Discuss the pros and cons of any contingencies that you are considering placing on your offer with your Realtor®. Below are the common contingencies included in offers that you should consider limiting or waiving if you are comfortable taking that risk.
-Home Inspection (Or do a home inspection with the option to void only)
-Financing (This can be very risky to waive so please discuss with your Realtor® and your lender.)
-Appraisal (This can also be risky and you could be required to bring extra cash to the deal if the home doesn’t appraise. You can’t truly waive this if you are using a VA Loan.)
-Home Sale Contingency (If you currently have a home to sell, if at all possible, get it under contract if not sold before placing an offer on a new home.)
Do Make Your Offer As Appealing As Possible To the Seller
Have your Realtor® find out from the listing agent what exactly the seller is looking for. Do they need a quick closing? Do they need some time to find a home of their choice? Do they need a rent-back after closing? Offering a free rent back to a seller is always a good strategy if you know that they need one. Anything that your agent can find out that a seller needs and that you can accommodate will make your offer stronger.
Do Use An Escalation Clause With Your Offer
An escalation clause can be a great tool to help your offer stand out if used appropriately. An escalation clause says that you agree to pay a certain amount over the top offer received up to a set amount. For example, when making an offer for $520,000, you could say, that you will pay $1015 over the top offer up to $531,595. If you notice, I did not put any round or even numbers in my example. Part of a good strategy when using an escalation clause is to use numbers that might just push you slightly higher than someone else who is using an escalation clause but has filled theirs with even numbers.
Do Consider Making A Sight Unseen Offer
If you see a home listed as “Coming Soon” and you think that it might be the perfect home for you, consider submitting a sight unseen offer if the seller will entertain it. Your agent may be able to put a clause in the offer, making it contingent on your actually viewing the home. Another strategy is adding a home inspection contingency with the option to void only. While, waiving a home inspection contingency is a good strategy in some cases, I would highly recommend not waiving it when using a sight unseen offer because this contingency gives you the option to void the contract if you do not like the home. Just know that if you plan to use the home inspection as an option to void, you will have to pay around $500 or so for the home inspection which has to be completed before you can void the contract using that option. The other option for voiding a contract on a sight unseen home if it ends up not being what you are looking for is voiding based on a review of HOA documents if it is in a community with an HOA. Making a sight unseen offer carries its own set of risks, so be sure to discuss the pros and cons with your Realtor®.
Do Ask Your Realtor® To Reach Out To Potential Homeowners
Just because a home isn’t listed on the market at the moment, doesn’t mean that the seller won’t consider selling. If there is a particular home that you love or even a particular neighborhood that you really want to live in, ask your Realtor® to reach out to the homeowners in that home or neighborhood and see if they would consider selling if the terms were right. Many times buyers have had success finding a home in the area that they want when their agent has done this. Sometimes an owner is getting their home ready to list and is not quite ready yet or sometimes they are just thinking about listing and the communication from your agent could be what gets them moving.
Don’t Write A Personal Letter To The Seller
While this bit of advice may be contrary to many things that you have heard or read, writing a buyer “Love Letter” or contacting the seller in any way is really not a good idea. The thinking on this practice has really changed in just the last few months. When you reveal anything personal about yourself to the seller, you are opening up the possibility that the seller may choose to discriminate against you (and thus your offer) in some way. Your Realtor® can let the listing agent know anything pertinent that needs to be conveyed to the sellers without opening you up to the possibility of discrimination. The best way to let a seller know how much you love their home is by submitting a super strong and clean offer!