Yes, we are definitely in a very strong Seller's market which has lead to a "bidding war" by Buyers. The severe lack of inventory along with historically low mortgage rates has created this atmosphere.
So here are some tips to help have your offer accepted!
Ever found that perfect house only to get out-bid on your offer? In seller’s markets,
when demand is high and inventory is low, buyers often have to go above and beyond
to make sure their offer stands out from the competition. Sometimes, multiple buyers
vying for the same property can end up in a bidding war, both parties trying to
sweeten the deal just enough to edge out the other. And while there’s no science
behind winning a bidding war on a house, there are things that you can do to up your
chances.
* Price Escalation
An escalation clause can be an excellent asset when trying to win a bidding war.
Simply put, the escalation clause is an addendum to your offer that states you’re
willing to go up by X amount if another buyer matches your offer. More specifically, it
dictates that you will raise your offer by a specific increment whenever another bid is
made, up to a set limit.
* Guaranteed Cash Above Appraisal
Should the Appraised Value of the Property come in below the Contract Purchase
Price, Buyer will guarantee to pay (x $) in cash above Appraised Value not to exceed
Contract Purchase Price. All other Terms & Conditions remain the same and in full
effect.
* Close Date for the Seller
Maybe the seller of the home you want wishes to close quickly. Or maybe he or she
wants to delay that closing for a number of months. Either way, the more accommodating you are, the greater your chances of winning that bidding war -- even if it means inconveniencing yourself a bit in the process.
* Large EMD…1% of Purchase Offer
Shows strength of the offer
* Full Loan Approval, not just pre-approval and certainly Not pre-qualify
* Conventional loan instead of VA or FHA
* Substantial Down Payment
A higher down payment means less money will be required from the bank, which is
ideal if a bidding war is pushing the price above and beyond what it might appraise
for.
* Reduce the Cap
This is an amount of the Purchase Price generally 1% that the Seller will be responsible for Termite/Moisture, Appraisal & Septic/Well repairs
* Mini Home Inspection or for informational purposes only
"Buyer reserves the right to the Release from the Purchase Agreement, with all parties executing a Release Agreement, and the Deposit refunded in full to Buyer if, in Buyer's sole determination, significant structural, system, safety, termite or moisture deficiency is found."
* Shorten the Time Frame for any/all inspections
* As Is condition
* Home Warranty
* Seller Possession
Being able to rent back the property to the seller for a short time while they solidify
their next purchase can go a long way into not needing to overbid on the property
* Write an honest heartfelt letter
* Backup Offer
Finally, don’t be afraid to walk away. The last thing you want to do is get overemotional and overstretch your budget. Don’t be house-poor. That defeats the whole purpose of the investment.
And remember, there will always, always be another home