One of the big issues facing home buyers for the past year or more has been the relative lack of inventory, especially at the low end of the housing market. As the number of homes for sale in an area decreases and the number of potential buyers remains the same or increases, the price of homes rises.
If you find a house that you really like, whether an entry-level home or a move-up purchase, chances are pretty high that at least one other potential buyer likes the house enough to make an offer on it. That’s when things can get a little tricky.
How do you compete against other buyers and get the keys to the home you want? First, be prepared for the competition. For most buyers, a home is the largest purchase they’ll ever make. Getting into a bidding war over a home can lead to a larger emotional component than a financial component in the offer you make. Map out what you will do if the bidding heats up and stick to your plan.
Here are a handful of other steps you can take to increase your chances of getting the home you want. The list was put together by Tara Mastroeni at Realtor.com, where you can find more details.
Offer more money. Obvious, no? But you could include an escalation clause in your offer indicating your willingness to meet or exceed other bids, up to a point. Also consider offering to put more money into the escrow account.
Keep the financing clean. If you can afford it, pay cash. A cash sale makes everything a lot simpler and means that no financial institution will be involved. If you can’t pay cash, get preapproved by a lender.
Buy the home “as is.” Are you willing to buy a house that may have some problems that the owner would have to fix before the house is sold? Depending on what these problems are, offering to buy the house “as is” can tip the scale in your favor. Any required inspections would be for information purposes only, although you can (and should) include in the offer that major issues (cracked foundations, for example) are deal-killers.
Write a letter. People who have lived in a house for a long time have usually become attached to it and like to hear how much you love it too. This likely won’t substitute for more money, but if the bidding is close, it could swing the deal in your favor.
Have your agent make some calls. Your agent should call the sellers before you make an offer to find out if what you plan to offer is in the ballpark they’re looking at. Once you’ve submitted your offer, the agent should call again to reinforce your interest in the home. Even if you don’t win the bid, it ain’t over till it’s over. Have your agent check to see whether the deal fell through and the house is back on the market.