“We’re in a seller’s market.” What the heck does that mean? What it means for buyers is frustration as house after house gets lost to a higher bid. In today’s current market home sellers are receiving multiple offers on their homes; sometimes as many as 10 or more.
Don’t despair; there are steps buyers can take to make their offer more appealing to a seller.
1. Get preapproved. NOT prequalified. The only thing prequalification does is let a buyer know how much money they can spend on a home. Preapproval lets the seller know a buyer is serious about purchasing their home. Preapproval is a statement from the lender that they will finance the buyer up to a certain amount. It requires the buyer to submit financial information to the lender such as bank statements, tax returns and pay stubs.
2. Consider making a larger down payment. More money down shows that a buyer is making a serious commitment to purchasing a home.
3. Don’t ask for any extra contingencies or repairs. The less the seller has to do to sell the house, the happier they will be and the more accepting they will be of an offer.
4. Show them the money. The market may change in a few months but for now, if a buyer has extra money in the bank make sure it shows. Sellers want to know that escrow is going to close on time. They are looking for the buyer who has extra cash in the bank and isn’t contingent on financing approval to close. The seller could counter with a higher offer than the one submitted but all financed homes are contingent upon an appraisal confirming the value of the home. If the appraisal doesn’t come in at the price offered a buyer has three options: ask the seller to reduce their asking price to the appraisal amount; pay the difference between the appraisal and the offer amount in cash; or cancel the offer.
5. Start saving. Every little bit saved counts and will make the offer more appealing.
6. Submit a letter with the offer telling the seller why the buyer wants the house and why it would mean so much to the buyer. Let the seller see that the buyer will love the home as much as they have.
Sure it’s tough getting outbid by buyers with cash and investors but there are still plenty of homeowners willing to go with non-investors. Some sellers don’t like the idea that their beloved home might be purchased by an investor and used as a rental. The best tip? Hang in there. The market is going to change. Sellers who have been hanging on waiting for the value of their home to rise are going to start to sell and then it will become a buyers market as those sellers have to bend to the whim of the buyers.