One of my friends was looking for a home.
His dream homes were going off the market as soon as they were coming in!
He started taking time off from regular work hours to visit houses for sale.
It was like, as soon as the realtor called he, off he went.
After a few such trips, now he’s waiting for the closing. In the process, he lost many good homes to other higher bidders or he was simply late to bid.
In a seller’s market, the one we are in now, better houses that go up for sale can come and go in a single day.
As a seller, this is the best time to sell a house – you’ll make more money and have a hungry audience.
However, as someone looking to buy a house, it means you’re going to have to make your offer more competitive than the other buyers out there.
But what can you do?
Aside from price, an offer is just an offer, right?
Keep reading to learn all the most compelling techniques for making an offer on a house.
1. Get Preapproved
This is stategy #1– First, before you start shopping for a home, you need to get preapproved by your bank or other lending agency.
Getting preapproved lets you know exactly how much money you’re working with, preventing you from placing an offer on a house that you can’t afford.
Additionally, getting preapproved signals to the seller that you are ready and able to buy the house.
Often realtors put extra efforts for the people with preapproval.
The amount of preapproved loan tells you where your ceiling could be, w.r.t to the house price.
This means your offer is valid and they won’t have to worry about your funding falling through soon after.
This is also essential when looking at new construction homes.
Find out more about the new construction home process before making an offer or starting a build.
2. Cash Offers Are Rarely Turned Down
Even better than a preapproval is an all-cash offer.
Making an offer on a house in cash is a lot less complicated. There are no financial issues that can arise and everything is clean.
So, strategy #2 – If you have the money, put it out loud:
“This is an all-cash offer“!
Sellers would probably ditch the first commitment, in your favor.
At least I’d.
Loans can fall through days before closing when buyers make the mistake of taking out credit cards, small loans, or making other major purchases before a house closes.
Sellers are aware of the chances of loan disruption happening, and they can’t deny a all-cash buyer.
3. Don’t Have Any Contingencies
While a contingent offer is still an offer, it’s not a very appealing one.
A contingent offer means you intend to buy a home “if” something else happens.
Typically, this happens when a buyer is waiting for their own house to sell before they can be approved for the house they’re placing an offer on.
Technically, when you’re not preapproved for a loan, any offer you place on a house is contingent upon your eligibility for that loan.
In a seller’s market, most likely, you’ll get run over by another bidder, if you place contingencies.
4. Make Your Offer More Competitive
This is an excellent strategy if you’ve monetary support and are in absolute love with the property.
Recently, my colleague applied this strategy. This originally came from his realtor.
Making an offer on a house that’s sure to grab the seller’s attention means sweetening the pot.
Create an escalation clause in your offer that states you will offer ‘x’ amount more than any other bids up to a certain amount.
This automated process is especially important in a seller’s market where house sellers are likely to get multiple bidders.
5. Offer More Earnest Money
Finally, you can show a seller that you’re serious about buying a home by increasing the earnest money.
Earnest money is given to a seller after both parties agree on a contract.
Should you back out of the deal before closing, the seller keeps your money, otherwise, it goes toward the purchase of the home.
If you’re trying to stand out to a seller, making an offer on a house with added earnest money is sure to get their attention.
Want to Learn More About Making an Offer on a House?
If you’re looking for more financial tips on making an offer on a house, saving for retirement, or investing, you’re in the right place.
Be sure to read some of our other articles before you go. And good luck with your house hunting.