How do you make yourself a stronger buyer in today’s highly competitive, low-inventory market?
If you have more money to put down with a cash offer, that might trump a conventional, FHA, or VA mortgage. However, if you don’t have the means to purchase with cash, there are a few routes you can take. For example, could you put down 20% with a conventional mortgage? If not, don’t sweat; the other common types of financing work fine, but you’ll still want to bolster your position as a buyer by other means.
Putting down a larger good faith deposit is something to consider. In the Louisville market, we typically put down between $500 and $1,000, but in larger markets, it’s common to see 5% to 10% go into a holding fee. Upping your deposit can illustrate your financial capability and commitment as a buyer.
Furthermore, do you have the flexibility to give the seller more time to move out? When it comes to the closing date, what are the seller’s needs? If you’re willing to close in the time frame that best suits the seller, your offer immediately becomes more competitive. Remember: It’s not always about top dollar.
Do be aware, however, that homes are indeed going for top dollar because of the pandemic and the exacerbated shortage of homes in the market; understand that when you write an offer, it will have to be at asking price or above it. That may not be pleasant to hear, but it’s the reality of our market.
Now, what happens if you wrote an offer for a house you loved but didn’t win the bid? You can always do a backup offer, which is when you negotiate with the seller to accept your offer in the event the original winning offer falls through. You can have your agent reach out to the listing agent and ask for your offer to be considered as a backup. If they say yes, great, but if they say, “We won’t consider your offer as it’s written currently,” then you can consult with your agent and tweak your offer accordingly. Backup offers are always a wise play because the house won’t go back on the market if the original winning offer falls through—your offer will automatically become the winning bid.
It’s okay to have a backup offer in effect on a property while you continue searching for other homes because there’s a clause in your backup that will protect you; you’ll always be able to rescind that backup offer at any time you see fit.
Show yourself as a stronger buyer by maximizing your financial approach as much as possible, manipulating a couple of terms on the contract, and submitting backup offers to stay competitive.
If you have any questions about buying in a seller’s market or you happen to know someone who’s looking to buy, sell, or invest in real estate, please don’t keep us a secret. We’re always happy to chat. Reach out via phone or email, and don’t forget to hit that subscribe button! We look forward to hearing from you soon.