Factors to Consider for a Competitive Offer
As a prospective homebuyer, you need to mentally prepare yourself for the likelihood that you will make offers and they will be rejected. What happens when you find the home of your dreams, and losing is simply not an option? Here are a few factors you want to consider when making a competitive offer and playing to win.
Know the Competition, and Your Opponent
The best place to turn when you want to know what the seller of your dream home is looking for is simple – their real estate agent. Find out how long the home has been on the market, why it’s on the market, if the sellers have any specific needs when it comes to the particular of their own move and if they have had any offers already. Sometimes selling a home can be emotional for many people, so if you can relate to any of the experiences the seller had while living in the home (birth of their children, attendance at local schools, addition of a pool they are particularly proud of) be sure to communicate this to their agent, and develop an emotional tie of your own to the house. Use this information to capitalize on your own assets so you bring something to the table that the seller is seeking in a buyer, making you the competitive offer that they can’t refuse.
Triggering Events
When it comes to knowing your bargaining powers, there are a few key strategies for securing your own future, and some important indicators for figuring out the sellers. If you are able to meet any of the following conditions, you will put yourself in an extremely attractive buying position:
- You are an all-cash buyer
- You have been pre-approved for a mortgage that covers the price of the house, and then some
- You don’t have to sell a house in order to buy this new one.
Likewise, if the sale of the house is under any of the following conditions, the seller is under added pressure and will be looking to make the quickest, best deal ASAP:
- Every month the house remains unsold leads to significant expense for the seller
- An impending divorce is contingent upon the sale of the house
- The house is part of an estate sale
Raise Your Bets
Two ways to differentiate yourself from other buyers and raise the stakes are by using an escalator clause and raising your deposit. An escalator clause is an agreement from you, the buyer, that states should there be a higher bid than yours, you will up your original offer to beat it. Be warned that if the appraisal comes back and the listing price is overvalued, you will still be liable to pay the full price of your higher bid, should the opportunity present itself. Raising your deposit, on the other hand, indicates to the seller how serious of a buyer you are. If the seller has requested a certain amount, try doubling it with your deposit.
Making some of these tiny sacrifices will feel like nothing in the overall scale of things when it comes to finding the home of your dreams. Be creative, be personable but most of all, be receptive to the sellers needs and find your ‘in’ on the deal. Flexibility on the buyer’s end can go a long way, and the little things can add up quickly for a seller.