In this tough market, home bidding wars on homes are bound to happen. There’s not enough supply for buyers. And news flash, there’s a high chance multiple buyers are also looking for the very same home you want. So how can you improve your offer to stand a chance? After my recent listing with 40 showings and 13 offers over a weekend. Here’s some insider information from the selling side that will help you craft a competitive offer to improve your chances of winning a bidding war. Besides the obvious of offering the most money, here’s what the top buyer’s offers did to stand out:
1. If financing, get a fully underwritten pre-approval meaning your lender has verified your finances, employment, and funds. Provide all the required documents to your lender and make sure they review it. You don’t want to get any surprises, especially after you worked so hard to get that accepted offer to only find out you aren’t actually qualified.
2. Put down significant earnest money above the standard 1%. The higher the better, it shows you’re a serious buyer. If your offer is written correctly, you can still recover your earnest money. And think about it this way, you may be putting down 5% or more towards the purchase of the home anyway. So why not bump your earnest money up to improve how your offer looks. It can give your offer the edge over another buyer’s.
3. Prior to writing your offer, have your agent call the listing agent to ask if the seller is looking for any specific terms or accommodations in their offer. Decide if you can meet those requests. Strategize with your agent and loan officer to make sure you have presented the best due dates that they can meet. Some sellers will want a buyer who can close quickly while others may require flexibility close later or even post-closing occupancy.
4. Provide an appraisal gap along with proof of funds showing you have the funds to back up the appraisal gap in case it is needed. With today’s dynamic home values and record setting purchase prices, appraisals are very hard to predict. Even listing agents and sellers cannot accurately gauge where the home’s appraised value will be. And you as a buyer will have to determine, how much do you want to pay for that home are you willing to put up the difference in appraised value to secure the home purchase? In today’s market, sellers are telling buyers to back up their purchase price offer.
5. Be realistic, recognize that in this market if a home just got listed and you know there are multiple offers in play. Don’t write your offer price at or below the list price. You may have wishful thinking that there’s a chance you’re going to get selected over 10 other offers already submitted. Reality is your offer is going straight to the bottom of the pile. Unless you have stellar terms – lots of non-refundable earnest money, all cash, no inspection, appraisal gap etc. This is only going to waste your time, your buyer agent’s time, and the listing agent’s time. Recognize when to say no and move on.
6. Follow-up call! If you really want that home, request that your agent follow up with the listing agent after submitting your offer. Check to see if your offer is in the running compared to the rest. You’re not able to get specific information on the competition’s offer but you can at least get a feeling of where your offer stands. Are you in the bottom, middle, or top? Check again what sellers would like to see in the offer. Based on that you can either decide to improve your offer before the deadline or let it ride and find out what happens.
If you need further explanations on this topic or help finding or selling a home in the greater Milwaukee area. Contact me today. Best of luck buyers! Happy house hunting!