Spring has sprung in the housing market and buyers are seeing lots of competition for the few homes on the market. The number one question I get in these cases is "How can I make my offer stand out?". Here are a few suggestions:
1. Offer Asking price or more. If the you're interested in a "hot" property be prepared to pay the asking price or more. You'd be surprised how many buyers low ball their offer even when they know there are multiple offers.
2. Include a letter to the seller explaining why you should get the house. Be warned that the listing agent has no obligation to include this letter, but many do. Also be warned that a letter will no overcome a lowball offer. Sellers are not heartless but price matters more than your love for the house.
3. Make sure your financials are strong. Consider increasing your deposit to 30% or more of your down payment. It can be split into two deposits: maybe 10% at time of offer acceptance and the balance 5 days after inspection. If the house is really hot offer it all at offer acceptance. Risky but it may push you over the top. Discuss the pros and cons with your agent before proceeding.
4. The loan type matters. Conventional will beat FHA or VA in a head-to-head match up and Cash is king. FHA and VA loans may require repairs to be done by the seller that they don't want to do making these offers less appealing to the seller. If the home you're going after has offers with conventional mortgages, the FHA or VA buyer may need to offer more to make it worth it to the seller. Speak with your lender to understand the pros and cons and the impact to the seller.
5. Waive the inspection. Not generally recommended, but an option if you are comfortable with the seller's disclosure and your own visual inspection.
6. Waive the appraisal. A good option if you're paying cash. Not recommended if you're getting a mortgage. An appraisal will still be done, but if the house does not appraise you will have to make up the difference so be sure you have the cash reserves before waving the appraisal.
7. Be flexible on terms. The price is king, but the seller may have other needs that need to be met. The most common is the closing date. Do they want a quick close? Do they need time to find another home? Your agent should ask these questions so that you can accommodate the seller to the best of your ability. Sellers have the luxury of choosing any offer they like. Sometimes they choose a lower priced offer because the terms are more favorable. For them the loss of a few thousand dollars is worth it.
8. Agree to pay some or all of your agents commission. The real estate commission for many sellers is their single largest closing expense. Buyer's can strengthen their offer if they are willing to pay some or all of their agent's commission.
If you're still getting out-bid on your favorite homes consider these options:
* Look at overpriced homes that have been sitting on the market. The seller may be willing to accept a more reasonable price the longer it sits with no offers...and you'll have a lot less competition.
* Consider a home that needs a little work. Everybody wants move-in ready with all the bells and whistles so the competition is fierce. Consider a home that needs a little work and you may be able to negotiate a good price. Depending on the work needed, investigate a rehab loan with your lender to get some of the bells and whistles done before you move in.