Tips for Home Buyers in Hot Market

7 04 2005

With nationwide housing remaining hot, many prospective homeowners may find the home of their dreams…but then find themselves in a bidding war against a pack of other salivating buyers. So if you’re in the market to buy a home and find yourself in the unenviable position of being in a competition against multiple offers, here are a few ideas that might help give you the edge.

Think Like a Seller. When a seller enters into a contract with a buyer, they want to make sure that the deal is going to close. For a seller, nothing is worse than to enter into an agreement with a buyer, turn away other offers, take the home off the market for 30-60 days…and then not close.

Conditions or contingencies on the buyer’s behalf create more risk for a seller in a contract. If you can minimize or eliminate any contingencies, you can make your offer stand out in the crowd. Contingencies can include approval for financing, the sale of a buyer’s home, home inspections, and appraised value, among others. Get home loan financing arranged in advance via a pre-approval with your trusted mortgage professional. Investigate ways to be approved without the sale of the buyers home being a necessity. If a home inspection is important to you, arrange to have it done very quickly.

Do the Bump. If you are in a bidding war, determine the highest price you are willing to pay…and bump your offer just a very small amount above that. Instead of increasing your offer $5,000, try $5,250. That $250 may just be the amount that takes your offer above the other buyers…and will get you the house.

Raise the Bet. Increase the amount you are willing to lay out as an escrow or earnest money deposit with your offer. Your real estate professional can tell you what is common in your area for the home value – so take it up a notch above that amount. If you are certain you want the house and know that you will close, increase the size of your deposit. A larger deposit will give your seller greater confidence that the sale will close.

Sweeten the Pot. Although it may sound a little warm and squishy, consider writing a cover letter to the seller explaining exactly why you love the home and want to make it your own. Although this is a business deal, remember that you are moving into someone else’s home, and emotions can run high. If you really feel strongly about the home, let the seller know…and keep your thoughts about immediately tearing out all the velvet floral wallpaper to yourself.

When making the decision to work in a multiple offer situation, tread wisely. Consult carefully with a skilled Realtor and mortgage professional that knows the market you are buying in. They can help you in positioning an offer that not only entices the seller…but also protects you.



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