From the Desk of Peter Haring, Broker
Making an Offer in a Competitive Market
If you're shopping for a home today, you've probably come to understand that the real estate market has become more competitive due to limited inventory, especially in certain neighborhoods. At the time you decide to purchase your new home, it is important that the offer is both beneficial to you and the seller. One must keep in mind that they could be facing multiple offers, therefore along with a fair market price in which you and your Realtor® have determined, terms of the contract could be the deciding key factors.
Most importantly get a pre-approval letter. Proof of buying power gives the seller the confidence that you will follow through with your purchase. Most likely if the sellers accept your offer, they risk losing potential future offers by telling other buyers that their home is now off the market. Consequently, if they don't feel comfortable that you are a qualified buyer, they might not be as negotiable or as anxious to accept the offer.
Depending on the entire situation, your Realtor® will likely suggest one or more of these strategies to give your offer a competitive edge. The seller, in some cases, may be willing to accept a slightly lower price if the terms are good and they feel comfortable that you are a qualified buyer.
First, they may suggest that your offer includes a significant amount of earnest money. Essentially, a larger deposit will show the seller that you are capable as well as serious about purchasing their home. At the closing, the earnest money will be applied to the purchase price, therefore you are not investing additional funds but making a significant deposit towards the purchase.
Secondly, your Realtor® will make an effort to understand the seller's situation. Since some sellers may need some additional time to vacate the home, making an offer with either an extended closing date or giving the seller additional time to move may make the offer more attractive. Other buyers may not be so flexible and therefore your willingness to be accommodating could be significant in reaching an agreement.
One final idea is to agree to complete any inspection of the home in about one week. If your offer includes "an inspection period" that lasts 10 days or longer, it may not be as appealing to the seller because they will once again have taken their home off the market for that period of time.
Hopefully you find these tips helpful. If you're looking to buy a home soon, please call one of our professional sales associates. They will be glad to help you find that home as well as give good advice on preparing the offer. If the terms of the offer are good, the advice may even save you some money.