More often in today’s real estate market, buyers find themselves in an all-out ‘Offer Competition’ when trying to buy their dream home. They have already done their homework by getting pre-approved, determining what neighborhood they want to live in, and what type of home appeals to them. But now are staring down 3 or 4 other buyers who are determined to buy the same home.
While offering the most money might seem like the obvious way to win a bidding war, thankfully sellers don’t always choose the highest offer. There are situations where sellers might prefer offers that stand a greater chance of closing and/or that meet some of their other non-financial “needs”.
If you find yourself in an “Offer Competition” here are some tips to increase your chances of winning without adding to the price:
- As suggested above, have your lender pre-approve you BEFORE you look for a home, which is almost always required by any good Realtor these days. You will immediately be ready to make an eye-catching offer to the sellers; one with a very comforting pre-approval letter attached.
- Choose a bank whose pre-approval letters are known to be unfailing. Unbelievably not all pre-approval letters are actually based on the borrowers’ ability to get a loan! Ask your realtor if your bank is known for issuing trustworthy pre-approval letters, or if it gives a pre-approval letter to anyone that can fog the proverbial mirror. Further, a Seller often prefers to see a letter these days from a local lender like Great Midwest, as the national banks have had difficulty meeting closing deadlines in many circumstances.
- Cash is King. Some buyers are comforted to see a buyer put down a meaningful earnest money deposit. If you have the cash, consider putting down a larger than normal earnest money deposit. Which buyer appears most sincere to the seller – the one who offers an earnest money deposit of $500 or the one who offers $5,000?
- Meet the sellers “needs”. You already have your pre-approval letter to
show the seller you’re serious, so now make your offer irresistible by meeting
some other undisclosed “need”. Have your realtor ask if the sellers need a quick close, or if they would like an extra 15-30 days to move out after closing. That
might be enough to tip the scales in your favor.
Check out these FAQs on loan programs, rates and fees.
Posted by John Schroder NMLS ID #967896