The limited number of homes for sale today coupled with so many buyers looking to make a purchase before mortgage rates rise further, bidding wars (multiple offers) have been common. According to the latest report from the National Association of Realtors (NAR), nationwide, when offering on a home you could be up against an average of 4.8 competing offers per sale. Here’s a look at how that breaks down state-by-state (see map below):
The same report from NAR shows the average buyer made two offers before getting their third offer accepted. While still in a seller’s market, it’s important to know what optons you have to help your offer stand out from the rest. With my help as your real estate professional and my strategies in presenting a strong offer, here are a few things you could consider.
Offering over Asking Price
When you think of sweetening the deal for sellers, the first thought you likely have is around the price of the home. We have seen a small shift in market, however many homes are still selling for over asking price. You still want to make sure your offer is within your budget and realistic for the market value in your area, and that’s where I will help you through the process. Bankrate says:
“Simply put, being willing to pay more money than other buyers is one of the best ways to get your offer accepted. You may not have to increase it by a lot — it’ll depend on the area and other factors — so look to your real estate agent for guidance.”
Putting Down a Bigger Earnest Money Deposit
Another consideration is putting down a larger deposit up front. If your offer is accepted, this deposit is credited toward your home purchase. NerdWallet explains how it works:
“A typical earnest money deposit is 1% to 2% of the home’s purchase price, but the amount varies by location. A higher earnest money deposit may catch a seller’s attention in a hot housing market.”
This shows the seller you’re seriously interested in their house, have already set aside money that you’re ready to put toward the purchase, and have financial stability. We will talk more in detail on this as what NerdWallet says above is too low in our market to catch sellers attention.
Making a Higher Down Payment
Another option is to increase the down payment you’re going to make. Two benefits of a higher down payment is you won’t have to finance as much and if you’re putting at least 20% down you’ll avoid Private Mortgage Insurance – PMI. The idea is to help the seller feel like there’s less risk of the deal or the financing falling through. Plus, if other buyers put less down, it could be what helps your offer stand out from the crowd.
Non-Financial Options To Make a Strong Offer
Realtor.com points out that while increasing these financial portions of the deal can help, they’re not your only options:
“. . . Price is not the only factor sellers weigh when they look at offers. The buyer’s terms and contingencies are also taken into account, as well as pre-approval letters, appraisal requirements, and the closing time the buyer is asking for.”
When it’s time to make an offer, we will discuss all of these things and more. I make every effort to learn what sellers are looking for in order to draft our offer to stand out.
From a non-financial perspective, this can include things like flexible closing dates or delayed possession or minimal contingencies (conditions you set that the seller must meet for the purchase to be finalized). For example, you could make an offer that’s not contingent on the inspection if the seller provided one or we could do a pre inspection before offering. Ultimately, the options you have can vary depending on the property, so it’s best to chat about the home specific strategy and what you are most comfortable with.
In today’s hot housing market, you need a partner like me who can serve as your guide, especially when it’s time to write an offer. As your real estate professional, I am your best resource and coach for making the strongest offer possible for your specific situation.