I remember when a Bidding War was a rare thing. Something that was created by an intentionally under priced property that looked like a magazine in an ultra desirable neighborhood. This is no longer the case. I have had several listing agents tell me that they have had up to 15 offers after being on the market for 1-2 days and I have had this experience myself in this market as well. It is not uncommon for offers to go 20% above the asking price and sometimes inspections are being waived completely to obtain the properties. It is a tough market out there and there are several things you can do to make your offer stand out from the crowd.
- MARKET ANALYSIS – Make sure that your Realtor is doing a market analysis of the neighborhood so you know what past sales have been. If you are going to pay over list price – you want to make sure you are comfortable with the reality of how much you are paying because you are most likely going to sell this house in the future and you want to be able to sell for more than you owe the bank in a few years when you decide to sell. I know this 2BR may seem like a forever home but if you throw a couple kids in the mix. . . space suddenly seems extremely important to your sanity.
- INCREASE EARNEST MONEY – A larger earnest money amount is something that is compared between offers so make sure you are putting down more than the typical 1% earnest money in a normal market
- CONVENTIONAL FINANCING OR CASH – If you have access to cash from someone – that is the best case scenario but the next best thing is 20% down Conventional financing. Seller’s compare what type of financing you have and how much you have down. FHA financing won’t usually get a 2nd look unless they can offer significantly more than the Conventional offer the Seller has in hand.
- NO SELLER PAID CLOSING COSTS – In a market that is appreciating as fast as this one, there are appraisal concerns. If the appraisal does not come in at or over the purchase price, Seller Paid Closing Costs become an issue and could blow up the deal. This is a risk many sellers would rather not take if they have the option.
- SHORTEN INSPECTION – You can go a couple different routes here. You can either shorten the inspection days (make sure you can get all your desired inspections in within the amount of time you have) or go without an inspection at all. It is very beneficial for the Seller to know that they won’t have to worry about someone backing out. I say that with a HUGE warning. You don’t want to go without inspection unless you are comfortable with that choice. I don’t think most people fall in that camp but if you are an investor or have owned several properties in the past and you are comfortable with moving forward without inspection. . . that is an option. I have done this several times with my own properties but I have not always been happy about that choice in the long run.
- WRITE A LETTER TO THE SELLER – Sometimes this works and sometimes it does not – it depends on the situation. If you think you can get a Seller emotionally attached to you – it is worth writing a letter. If the Seller has done any work to the property it is important to validate all the blood, sweat, and tears the current owner has put into the home they love. Just because they are selling the house does not mean they are emotionally unattached. Actually it can be quite the opposite.
- FLEXIBLE CLOSING DATE – Communicate that you will close when convenient to the Seller.
- OFFER DELIVERY – There is a frenzy of activity around a multiple offer situation. The listing agent is getting a storm of calls/inquiries/offers. You want to make sure that your agent follows up to with a phone call/text/email to verify that your offer is delivered.
There are SEVERAL more ways to stand out but this covers the basics! Happy House Hunting!