In a hot housing market, your bid can often go against multiple offers. See what the experts say about letters to sellers, bids over asking price, and remaining persistent after a house sale.
You're ready to buy a home, but are fighting for the same property that multiple buyers want. Some days it feels as if the housing market isn't a market at all, but a housing competition, and only the person with the most money wins.
Not necessarily. Read on for six strategies to stay in the game and potentially come out with a winning bid in a seller's market.
1. Offer flexible closing options
Consider your own situation: Can you offer a flexible closing time frame? Doing so could save a seller on moving costs or emotional stress.
Let's say you aren't an all-cash buyer. However, you do have three months' left of rent that you are stuck paying for, regardless of moving into a house. Thus,you can offer a 30-day close with the option of the seller taking 90 days to move out. Suddenly, for a seller who might want to stay in their property so their kids can finish out the school year – your bid is the best one in the bunch. Be sure to have your agent communicate that benefit with the home's selling agent.
2. Stay in touch after a bid is “won”
In a market this competitive, it's not unusual for buyers to bid on multiple properties, hoping one is accepted. Or, for a buyer to bid so high that they arerequired to pay the different between the appraisal price and the price that was agreed upon in the sales contract. In either situation, a sale can potentially fall apart. If your agent has been checking in with the selling agent, that selling agent will know not only of your interest, but that your offer is still available. Should the sale fall through, you may have a prime opportunity to swoop in and make a reasonable offer on the property.
3. Write the love letter
Writing a note that introduces you, your love of a property, and how you will fit in with a home is not as silly as some make it out to be. Plenty of homebuyers have been swayed by an excellent letter, and it can often be the deciding factor between two similar offers.
Imagine you are a seller, finally letting go of a 30-year-old family home. Or perhaps you are a developer who spent extra time putting the perfect touches on the finishes – you want someone to appreciate all the time, memories and effort that went into the property. A love letter can express this appreciation and promise to care for the home. It's music to the seller's ears and a “yes” to yours.
4. Demand as few contingencies as possible
The seller wants to walk away from their home with the least amount of hassle. They don't want to pay for a broken faucet or to have their septic pumped yet another time before they hand over the keys. They'll gladly accept the “lightest” offer that makes an easy handover possible.
That being said, ask as many questions of the selling agent as possible. See if you can find out details about the age of the roof, furnace, if there have been significant repairs, issues with remodels, etc. If you end up waiving an inspection, you don't want major surprises after signing on the dotted line.
5. Include an escalation clause
Make an offer at the list price, but also include a clause that states you will pay a certain amount over the highest bid (up to your max cap). Let's say thehome is $550,000 and your cap is $570K:
- Place a bid at $550K.
- Include an escalation clause that outbids the highest bid by $2,000, up to $570,000.
- If it goes above $570K? See No. 6 below.
6. Know when to walk away
Ultimately, the right house will come along. It may take longer than you like, but it will happen. It's important to not break your budget just to “win” a house – there will be more houses.