You have been searching and have finally found your dream home in Lake Murray, South Carolina, and are ready to make an offer. However, you may be dealing with a cautious seller or a competitive market – so how can you make your offer more appealing so it stands out from the rest? In this article, we’re going to offer you 11 tips for making a competitive offer on a house.
A Competitive Offer Makes You Stand Out
In real estate, the market is either a buyer’s market or seller’s market.
A buyer’s market is where the buyer is favored. This is a situation where the buyer has the advantage over the seller in negotiations. On the other hand, a seller’s market is where the seller is favored. This is a situation where the seller has the advantage over the buyer in negotiations.
When conditions favor the seller, the buyer needs to make their offer more appealing- so we have gathered 11 tips for making a competitive offer on your dream home in Lexington or Lake Murray, South Carolina.
Get a pre-approval for a home loan
By taking the time to get a pre-approval for a home loan, you show the seller that you can afford to buy the home. As the buyer, this is always an important step. However, it’s even more critical if you want to make your offer stand out from the others that the seller will be receiving.
Make your offer higher than the list price
No matter where you are looking at buying a home, most of the time, making your offer higher than the list price will almost guarantee that you will get it. Therefore, if you can afford it, offer the seller more than they are asking.
Add an addendum for escalation
When you are making an offer on your dream home, you can include an escalation addendum, which is a stipulation stating that if anyone beats your offer, you will increase it by a certain amount. You can set the cap as high as you’d like. This will ensure that you don’t overpay- but it will keep you in the game if there are other offers coming in.
A contingency is a specific condition that must be met to close the deal, including a home inspection. In a situation where there are multiple offers, the buyer has the option of removing or reducing contingencies. This will reduce the seller’s risk and speed up the process. As a general rule, the fewer contingencies there are attached to your offer, the stronger it is. However, it does increase your risk.
Increase Earnest Money (Good Faith Deposit)
Earnest money, also referred to as a “good faith deposit”, is usually 1 to 3% of the price of the home. This money will be applied to the closing costs that the buyer is responsible for. It also shows the seller that you are serious about buying because if you decide to walk away after the offer is accepted, the seller keeps the earnest money. If you increase the earnest money, you prove that you are serious.
Increase Down Payment Amount
If you are able to increase your down payment amount, you will have fewer issues with financing through a mortgage lender. It also decreases risk for the seller. A higher down payment can be the difference between your offer being accepted versus it being rejected. You will want to be prepared with tax documents, pay stubs, and perhaps your 401(k) balance to show that you have the funds to make a larger down payment.
Write a Letter to the Seller
In some cases, taking the time to write a personal offer letter to the seller can make a difference. Try making a personal connection with them by telling them what you love about the home. Compliment them on various aspects of the home: color palette choice, landscaping, a recent renovation, or whatever strikes you. It won’t always make a difference, but sometimes a personal touch means more than making a higher offer.
Release Earnest Money Early
By releasing earnest money early, the seller gets it in cash prior to closing. The best offers release it immediately when going under contract. Of course, this is only a good idea if you have waived all contingencies when you made your offer.
Be Flexible on Closing Date
If the lender will allow it and you’ve already gone through underwriting, you may be able to agree to close quicker- within 15 to 21 days. Typically, the faster you agree to close, the stronger your offer will be. On the other hand, some sellers prefer a longer closing process. If this is the case, let the seller know that you’re willing to be flexible, which will give them more time to move their things into their new home.
Make a Rent-Back Agreement
If the seller is concerned about selling their home before buying a new one, as mentioned, you can be flexible with the closing date. Another option is to make a rent-back agreement to give them extra time to stay in the home after closing. Basically, you- the buyer- takes on the role of landlord and the seller is your tenant.
Of course, this doesn’t apply to everyone, but if you can pay cash, offer to do so instead of financing the purchase. This proves to the seller that you are serious about buying the home and it eliminates the need for a third party to be part of the process.
Trust the Lafayette Team
You’ve found your dream home in or near Lexington, South Carolina and you’re ready to make an offer. Unfortunately, buying a home can be highly competitive. The seller may be faced with a lot of offers and you need to make yours stand out. Keep these things in mind and you should be fine. Also, consider working with the Lafayette Team with EXP Realty. We specialize in working with first-time home buyers and sellers. Let us show you what we can do!