Our nation is in the midst of a serious
housing crunch. Last year, a lack of inventory and soaring prices left many
would-be homebuyers feeling pinched. But now, with interest rates climbing,
many of them are also feeling desperate to lock in a mortgage—which has only
added fuel to the fire.1
Fortunately, if you’re a buyer struggling to
find a home, we have some good news. While it’s true that higher mortgage rates
can decrease your purchasing budget, there are additional ways to compete in a
Yes, a high offer price gets attention. But
most sellers consider a variety of factors when evaluating an offer. With that
in mind, here are five tactics you can utilize to sweeten your proposal and
outshine your competition.
We can help you weigh the risks and benefits
of each tactic and craft a compelling offer designed to get you your dream
home—without giving away the farm.
1. Demonstrate SolidFinancing
The reality is, no one gets paid if a home
sale falls through. That’s why sellers (and their listing agents) favor offers
with a high probability of closing.
Sellers particularly love all-cash offers
because there’s no chance of financing issues cropping up at the last moment.
But don’t despair if you can’t pay cash for your home. According to the National
Association of Realtors, only about 1 in 4 home purchases are all-cash deals,
which means the vast majority are financed with a mortgage.2
If sellers are assured that financing will
come through, buying with a mortgage doesn’t have to be a big disadvantage. The
most important step you can take as a buyer is to get preapproved before you
start looking for homes. A preapproval letter shows sellers that you are
serious about buying and that you will be able to make good on your offer.
It’s also important to consider the reputation
of your lender. While sellers may not know or care about a lender’s reputation,
their agents often do. Some lenders are much easier to work with than others,
especially if you are pursuing certain types of mortgages like FHA or VA loans.3
If so, you’ll want a lender who specializes in these types of mortgages. If
you’re unsure who to choose, we are happy to refer you to reputable lenders
known for their ease of doing business.
2. Put Down a Sizeable Deposit
Buyers can show sellers that they’re serious
about their offer and have “skin in the game” by putting down a large earnest
Earnest money is a deposit held in escrow by a
title company or the seller’s broker or lawyer. If the purchase goes through, it is
applied to the down payment and closing costs—if the sale falls through, the
buyer may lose some or all of that deposit.
While an earnest money deposit is typically
around 1-2% of the sale price, offering a higher deposit can help demonstrate
to the buyer that you are serious about the property.4 However, this
strategy can also be risky. We can help you determine an appropriate deposit to
offer based on your specific circumstances.
3. Ask for Few (or No) Contingencies
Most real estate offers include contingencies,
which are clauses that allow one or both parties to back out of the agreement
if certain conditions are not met. These contingencies appear in the purchase
agreement and must be accepted by both the buyer and seller to be legally
Common contingencies include:
Financing: A financing contingency gives the
buyer a window of time in which to secure a mortgage. If they are unable to do
so, they can withdraw from the purchase and the seller can move on to other
Inspection: An inspection contingency gives
the buyer the opportunity to have the home professionally inspected for issues
with the structure, wiring, plumbing, etc. Typically, the seller may choose
whether or not to remediate those issues; if they do not, the buyer may withdraw
from the contract.
Appraisal: Most lenders will not offer a
mortgage on a home that costs more than it's worth. An appraisal contingency
gives the buyer an opportunity to get the home professionally assessed to
ensure that its value is at or above the sales price. If an appraisal comes in
low, the seller may be asked to renegotiate the contract.
Sale of a prior home: Some buyers cannot
afford to purchase a new home until they sell their previous one. If the buyer
is unable to sell their current home within a specified window of time, this
contingency enables them to withdraw from the contract without penalty.
Since contingencies reduce the likelihood that
a sale will go through, they generally make an offer less desirable to the
seller. The more contingencies that are included, the weaker the offer becomes.
Therefore, buyers in a competitive market often volunteer to waive certain
However, it’s very important to make this
decision carefully and recognize the risks of doing so. For example, a buyer
who chooses to waive a home inspection contingency may find out too late that
the home requires extensive renovations, and a buyer who waives the appraisal
may risk their mortgage falling through. If you back out of a home purchase
without the protection of a contingency, you could lose your earnest money
deposit.6 We can help you assess the risks and benefits involved.
a Flexible Closing Date and/or Leaseback Option
When it comes to selling a house, money isn’t
everything. People sell their homes for a wide variety of reasons, and flexible
terms that work with their personal situations can sometimes make all the
difference. For example, if a seller is in the process of planning a
significant move, they may prefer a longer closing timeline that gives them
time to find housing in their new location.
Similarly, short-term leaseback options, in
which the sale is completed but the seller retains the right to rent the home
for a specified period of time, can be compelling.7 These arrangements
enable the seller to use the money from the sale of their home to purchase
their next house. A leaseback agreement also makes it possible for them to
avoid moving twice when their next home is not yet ready to occupy.
Flexible closing dates and leaseback options
can provide a powerful advantage for first-time homebuyers. If you have a
month-to-month or easily transferable lease, for example, you may be able to
offer a more flexible timeline than a buyer who is simultaneously selling their
Of course, the value of these terms depends on
the seller’s situation. We can reach out to the listing agent to find out the
seller’s preferred terms, and then collaborate with you to write a compelling
offer that works for both parties.
With a Skilled Buyer’s Agent
In this ultra-competitive real estate market,
one of the greatest advantages you can give yourself is to work with a skilled
and trustworthy real estate professional. We will make sure you fully
understand the process and help you submit an appealing offer without taking on
too much risk.
Plus, we know how to write offers that are
designed to win over both the seller and their
listing agent. The truth is, listing agents play a huge role in helping sellers
evaluate offers, and they want to work with skilled buyer’s agents who are
professional, communicative, and courteous.
Once your offer is accepted, we’ll also handle
any further negotiations and coordinate all the paperwork and other details
involved in your home purchase. The best part is, you’ll have a knowledgeable,
licensed advocate on your side who is watching out for your best interests
every step of the way.
Helping You Get to the Right
In many cases, a competitive offer doesn’t
need to be all-cash, contingency-free, or significantly above asking price. But
if you’re serious about buying a home in today’s market, it’s important to
consider what you can do to sweeten the deal.
If you’re a buyer, we can help you compete in
today’s market without getting steamrolled. And if you’re a seller, we can help
you evaluate offers by taking all the relevant factors into account. Contact us
today to schedule a free consultation.