When a home goes on the market in a popular neighborhood, it can quickly garner many offers. How can you get the home you want to buy at a price you can afford if there are several offers, and some buyers are even offering more than the listed purchase price?
It turns out that purchase price isn’t the only criteria that home sellers consider when they have multiple offers to buy their home. They can consider other factors, including loan or appraisal contingencies, and will appreciate buyers who are flexible on needed repairs.
What factors will sellers consider when choosing between offers on their home?
Earnest money deposits: to prevent a buyer from making multiple offers to buy multiple homes, a deposit of money with a real estate brokerage or escrow company can secure your offer and show sellers that you sincerely want to buy their home. Your real estate agent will advise you as to the right amount of earnest money deposit, which can vary depending on the seller and on the current real estate market in the neighborhood where you want to buy. Just a side note: make sure your purchase agreement discusses how your earnest money deposit will be refunded if there are problems like a failed home inspection.
Write your best offer: work with your real estate agent to determine the best offer that you can reasonably afford. Especially in tight real estate markets, this can help you to be the winning offer when the seller makes their decision.
Get loan pre-approval: We’ve previously written about the importance of being pre-approved for a loan. Having loan pre-approval greatly increases your chances of your offer being taken seriously and accepted.
Prepare a counter offer: work with your real estate agent to prepare a counter offer in case the seller requests one. Your agent has the experience to advise you in the counter offer process.
Don’t get into a massive bidding war: We get it — you fell in love with a house and you really want it. But you could fall prey to overbidding. Basically no homes are worth paying more than you can afford. Give yourself some backup home choices, and leave the bidding wars to the ultra-competitive people who will get caught up in the desire to beat the other guy at any price.
All of this can sound overwhelming. Working with a real estate professional who can establish a good working relationship with sellers and seller agents will be key to helping you buy the home you want at a price you can afford.