The real estate market is booming, and the effects of the pandemic have left the country with low inventory and high demand for housing. If you are entering this market, you will need to be well prepared to make an offer in a competitive field. With the right strategy, you can make an offer that’s hard to refuse, so you are ahead of the competition and have sellers interested in saying “yes.”
If you have never purchased a home, or it’s been a while since your last home purchase, the first step is learning how offers work. This education will help you make the most appealing offer. Next, talk to your real estate agent about your local and state rules about offers, and structure yours so that it lines up.
Make sure you are working with an agent that you trust. Choose an agent that will take the time to answer all of your questions and educate you on best practices you can use to make your offers as appealing as possible.
There are features of a home purchase offer that make it flexible, which is something buyers like to see. For example, you might be able to offer the seller a period of rent-back. At the same time, they finalize their move, or you might be able to structure an offer with a larger down payment or n contingencies if you structure it properly. The more flexibility you can weave into your offer, the more appealing it will be.
If you have competition for the home you want, you will need to make your offer as attractive as possible. Some actions can make your home offer more attractive.
First, make sure you have mortgage pre-approval. The seller wants to have some confidence that your offer is backed by funding. Entering the process with the go-ahead from the lender is helpful.
Next, make the offer price fair, but base it on current market conditions. Don’t try to lowball the seller. They will choose a different offer or simply reject yours. Instead, make sure the offer reflects the asking price and the current market conditions. Your agent can help you evaluate market conditions to choose a price that will make your offer appealing. If you need to offer less, consider asking for contingencies instead, such as making a full-price offer but asking the seller to tackle some necessary repairs before you buy.
While there are steps to take to make an offer more appealing, there are also steps you can take that will hurt your chances of having your offer accepted.
First, offering an insulting purchase price far lower than the asking price is not a good idea. Either the seller will completely ignore your offer, or you will put them in a negative mood toward you as you seek to negotiate an acceptable agreement.
If you add contingencies, be careful with them. They may be necessary to make the home purchasable and protect you as the buyer. That said, contingencies that are too hefty can make your offer seem less appealing. Be careful with the contingencies and choose only those necessary to make you want to move forward with the home purchase. Make sure that a home inspection contingency is part of it, but other personal opinion contingencies may not be necessary.
Finally, don’t forget that the seller has needs, too. Strong offers address the seller’s goals and the buyer’s goals. This part of the process is where your real estate agent can help you with the negotiation process.
Sometimes, eager homebuyers will make an offer, only to find that they change their mind. However, a home purchase offer is a legally binding agreement, so what can you do if you change your mind?
The answer depends on where in the process you are. If you have not had the offer accepted, you can rescind the offer without a problem. Simply send the Notice of Withdrawal of Offer to the seller, and you can move on with looking. However, it is a legal contract once the seller accepts the offer. You still have some recourse to make changes, but you will need the help of a real estate agent to do so legally.
Making an offer on a house is an exciting step on the path towards homeownership. Reach out to our experienced agents to get professional help and guidance on this process.