Found the Right Home? How Homebuyers Can Make an Irresistible Offer That Sellers (Hopefully) Can’t Resist
Homes are still in short supply in today’s housing market—which means competition for homes with plenty of curb appeal in desirable areas can be fierce.
The right offer can be the key to landing your desired home. Contingencies, close times, and flexibility can matter more, in some cases, than if you submit the highest offer. Terms matter.
So, what makes an offer stand out to home sellers? There are quite a few strategies that buyers can employ to increase your odds of submitting a successful offer.
Below are some tips savvy buyers can follow before they turn in their best offers.
Research your local housing market
Homebuyers should do their research to understand the markets they hope to purchase real estate in before submitting an offer. Do homes often come up for sale in the buyer’s dream neighborhoods? Do homes tend to sell quickly—or do buyers generally have more time to make up their minds? Do homes typically sell for over—or under—the asking price?
You can do much of this research yourself with the help of real estate listing websites like Zillow, Redfin, and Realtor.com. Search for recently sold homes, filtering for homes in similar areas with your desired number of bedrooms and bathrooms and square footage.
This way you have the information you need to submit a competitive offer.
“Do not just make up a random offer number that feels good,” said Austin Glanzer, owner of Lancaster, Penn.-based 717 Home Buyers. “Look up houses in the area with the same number of bedrooms and bathrooms, and similar square footage, and work backwards.”
Work with a real estate professional
One perk of working with a real estate agent is they can generally help you figure out “comps.” These are the comparable properties that have recently sold.
Working with a respected agent can help your offer be viewed more favorably by the seller’s agent. Your agent can also work with the seller’s agent to figure out what you can offer to be more competitive.
“Work with an agent with experience,” says Tyler Coon, founder of Asheville, N.C.-based Savvy STR Realty. “There are so many ways in which this benefits you as the buyer.”
Make sure you are pre-approved for a mortgage
You should also make sure they are pre-approved for a mortgage before you go home hunting. This way you know if you will be able to get a mortgage or if there some things you might have to fix first.
Getting a pre-approval can also help you to figure out what your budget is for a home.
It signals to sellers that you are serious about buying their home. That can give you a potential advantage over a buyer who has not been pre-approved.
Know when to go low (or when to go high)
Your offer on your dream home doesn’t always need to be for the list price.
Instead, you may be able to offer less and save yourself some money if the home has been on the market for more than 30 days and the sellers are eager to close.
The opposite is true for the most desirable homes. You may want to consider offering more than the list price for a well-priced, move-in ready home in a popular location that has been attracting a lot of interest from other buyers. This sort of home may sell in a bidding war.
But Glanzer adds that whenever you do submit an offer, “you communicate that you are making it as objective as possible based on the market.”
Think about what else you can offer to sweeten your offer
Home offers are often about more than just the purchase price. Instead, there are a few extras you can add to your offer to entice sellers.
Often sellers look more favorably on all-cash offers or offers with higher down payments. They may view these buyers as more financially stable and less likely to back out of a deal.
Glanzer says that a good offer should “look to solve the seller's problems. Sometimes an offer isn’t even about the money.”
Try to understand a seller’s pain points—do they need to move ASAP? You may be able to offer a shorter closing time. Are they wary of needing to move too quickly? Consider an offer that rents it out to them for a month or two.
Know your financial limits when making an offer on a home
In the midst of all the home-offer hubbub, it’s easy to get lost in beating out the competition and doing whatever it takes to land a dream home. But you should make sure you understand your financial limits.
Know your budget and the maximum amount you can offer before you start touring homes.
If you do decide to wade into a bidding war, know when it’s time to walk away. You may win the home but then be stuck with a property you can’t really afford.
Don’t waive home inspections or appraisal contingencies
One more thing to keep in mind when placing an offer on a home: Don’t waive inspections.
While it can be tempting to sneak this clause into your offer to make it more enticing to a seller, it can land you in serious hot water.
You may feel pressure to waive the home inspection, but then you’re on the hook if there are large, expensive problems with the home—such as a roof that needs to be replaced, a mold problem that isn’t visible to the naked eye, or structural or foundational issues. These problems can set homeowners back thousands—if not tens of thousands—of dollars.
Buyers also want to be careful about waiving appraisal contingencies. If the home doesn’t appraise for as much as you expected, you could be on the hook for the difference between the appraisal and what you offered.
Take the next step in your path to homeownership with New American Funding.