You’ve finally found your dream home and you’re ready to buy! Whether this is your first home purchase or your fifth, making an offer on a house can be nerve-wracking, especially when you’re not the only buyer who’s interested. In a hot real estate market, you'll likely be competing with multiple offers, which begs the question, how can you make your offer stand out?
Contrary to popular belief, when it comes to making an offer on a house, it’s not always just about price. Although price is an important factor, there are several other items that sellers usually take into consideration - which may end up winning you the deal.
To help you put your best foot forward, we’ve asked our Jovio Real Estate Specialists to weigh in on what it takes to make a winning offer. From understanding a seller’s intentions to choosing a partner who can help you close the deal, here are eight tips to help you sweeten your offer and get you your dream home.
When you know you’ve found “the one,” it’s time to jump into action. Although buying a home is a big decision that should be weighed carefully, if you know this is the home for you, don’t hesitate. In a competitive market, it’s likely other buyers are just as interested as you are. Submitting the first bid can help you stand out in the seller’s mind and will often set the tone for other offers.
If it’s a home you don’t want to miss out on, make a strong offer from the start. Don’t underbid with the expectation that there’s room for negotiation. In a desirable market, you should come in as close to asking price as possible or even slightly above. If you come in under, you may risk being flat out rejected, especially if there are already better offers on the table.
Setting an expiration date for your offer can also help push things forward. If you submit a stellar offer with a short expiration, the sellers may be less likely to wait around to see if something better comes along. Instead, they may be more willing to accept so they don’t miss out on an offer that might be hard to beat.
Having a partner who understands the local market can make or break a deal. Your agent should be able to read the market and gauge the demand for the area you’re looking in. If they can do that, you’ll be much better equipped to present an offer that gets the attention of the seller.
One common mistake first-time buyers make is submitting an offer based on asking price alone. Instead, your offer should be based on the home’s value. A good REALTOR® should know of recent sales in the neighborhood and have a clear idea of what the home is worth.
Based on their conversation with the listing agent, they should also have a good handle on what the demand level is for the property and what a competitive offer might look like. When it comes to making an offer on a house, having a partner who’s knowledgeable and that you trust to negotiate on your behalf is truly invaluable.
Take the time to understand why the owner is selling in the first place. Are they relocating for work? Are they downsizing? Knowing what they’re looking to get out of the sale is also important. Do they need to move quickly? Do they need money to purchase another property? Although you may not know all of these details, understanding these factors can give you a better idea of what’s most important to them when it comes to the sale of their home.
If they’re motivated to sell, they may be willing to accept a lower asking price if it means speeding up the process. This is a situation where an offer with a shorter option period and quicker close date can help you stand out. On the other hand, sellers who have a longer timeline may be more willing to wait around for the best price.
A good agent will help you obtain this information. Your agent should ask the listing agent why the owners are selling, what their ideal close date is, and if they need the proceeds from the sale of their current home to buy a new one. Having this type of context into why the home is being sold can help you boost the desirability of your offer without having to increase the price.
Aside from your offer price, it’s important to show the seller you’re serious about buying their home. There are a few ways to do this, including presenting a pre-approval letter from your bank, offering a high earnest money deposit, and providing a large option fee.
Unlike being pre-qualified, which only entails a basic review of your financial information, being pre-approved means a lender has officially reviewed your credit, income, and other documentation and confirmed you're financially able to buy a home. Although pre-approval doesn’t guarantee you a mortgage, as your situation may change, it’s a strong indication to the seller that you’re a qualified buyer and ready to make a purchase.
Your earnest money is a deposit you make in good faith that you’re going to purchase the home. If you back out of the deal for a reason not specified in the contract, this deposit is money you won’t get back. By offering a higher earnest money deposit, it shows the seller you’re willing to put some financial skin in the game and are serious about closing the deal.
Similar to an earnest money deposit, an option fee is non-refundable, unless you terminate your contract through one of the appropriate clauses. Option fees are unique to Texas, but by offering up a large option fee, you’re reiterating to the seller that you’re very interested in the property and are ready to prove it.
After you sign a contract, you’ll have a specific number of days in which you’re allowed to end the contract for any reason. This amount of time is what’s referred to as the option period. It’s also when the home inspection will take place. By keeping the option period short, you shorten the time the seller has to worry about you backing out of the deal.
For sellers who are looking to close faster, a shorter option period also shortens the time to closing. No matter what the seller’s circumstances, it’s beneficial for you to be flexible with the close date. Working within the seller’s timeline may end up giving you a leg up on the competition.
Contingencies are conditions that must be met for the deal to go through. Limiting these conditions can make your offer more appealing to the seller. This is because contingencies allow buyers to back out of a sale with no consequences. The more contingencies, the higher the perceived risk you are to the seller.
Stay clear of contingencies that demand too much of the seller. For instance, a request for the seller to pay a portion of your closing costs or a contingency that states the transaction be dependent on the sale of your current home. These types of contingencies could be deal breakers for sellers with multiple offers on the table.
Sometimes a personal touch can go a long way. Including a thoughtful note to the seller might help you win them over. After all, selling a home that you’ve lived in for a while (and maybe raised a family in) can be an emotional process. Most sellers want to know that the home will be in good hands with its next owners.
Writing a heartfelt letter about why you love their home can help you stand out among competing offers. Share your story and why it would mean the world to you to live in their home. Call out and compliment specific features of the home. It may be just the push you need for the sellers to choose you.
Our best advice? Stay open minded and be willing to compromise. Although you may feel as though your offer is more than enough to win you the home, the seller may see things from a different point of view, especially if they’ve been presented with multiple offers.
Whether you’re compromising on the price or who pays for repairs, winning a home is all about give and take. Try to see the situation from the seller’s perspective and keep an open mind when it comes to negotiating. If you remain flexible while putting your best foot forward, you’ll be on your way to closing on your dream home in no time.
Looking for a trusted partner to help you close the deal? Learn more about how our Jovio Real Estate Specialists can guide you through your home buying journey from search all the way to close.