The housing market in Santa Clara County is very competitive. With home loan interest rates below 5% and at 40 year lows, the housing market near or at bottom, many buyers are making their move and shopping for deals. With that pent up demand comes multiple offers to purchase homes. Particularly when home buyers are looking for homes in good school districts, away from busy streets, with updated kitchens and baths. Competition is fierce. If you are a buyer and are getting a little frustrated on missing the phone call that your offer was accepted, take a look at these possible options for improving your offer.
1.) Offer the highest price and have all cash. Yes, “cash is king” works many times. However, recognize cash from an investor or non-occupant is considered weaker than all cash from a buyer who will actually occupy the home. All cash investors don’t hesitate to cancel a purchase contract on a home if they see something shiny on the next street over or find out something through investigations that keep the numbers from making sense on the investment.
2.) Offer the highest price with no loan or appraisal contingency. Scary to most buyers as they are not sure of what current appraisals will value the home and yet depend on appraisers to confirm their loan. If you set up the purchase based on the value you believe is accurate, then the appraisal shouldn’t be far off. Leaving out this variable can make a huge difference in the perception of your offer. If you have over shot the value, you will make up the difference in cash to secure your loan. If you can’t get the loan because you can’t support the difference, you risk losing your deposit. Your lender will still require an appraisal.
3.) Offer the highest price with no physical contingency. Unless you are a building contractor, this too can be pretty scary. Not knowing whether or not their are costly foundation issues or major termite damage can have a significant impact on value. But if the home is newer, under transferable warranty, or you happen to know the person that owns the home and you know the home has been well maintained, it may be worth beating out the other 5 offers.
4.) Offer the highest price with the shortest contingency periods and the fastest close of escrow. The sooner you can be definite about your purchase and close the deal, the better your purchase offer looks to the seller. Don’t just say you can do it. Show documented proof and phone calls from your loan officer.
5.) Offer the highest price with 20% or more down. Anything less than 20% down implies a FHA loan and mortgage insurance, which basically implies you are not the best qualified to a purchase a home and you are a higher risk buyer. If you are using FHA and are placing 3.5% down make sure you show strong proof of funds to close the deal. This means you should have 5-10% in the funds somewhere in your name.
6.) Offer the highest price and impress the seller. If you are looking at a home that is owner or tenant occupied, be nice. You are making an impression on the occupants/owners of the home and you can best believe they will take that in consideration when reviewing your offer. Mind your manners, this is the time to compliment the home and not tear it down. Ask them sincere questions about what they like about living there and let them know when their responses match what you are looking for in a home. If you like the open floor plan, comment on how it will work for your lifestyle. Do not ask if the refrigerator or play set is included in the sale. That will come later. Your agent should also mind their manners and represent you best when making appointments, previewing, or showing the home.
7.) Offer the highest price and do your homework. Look for permits and ask for inspections and disclosures up front. If the home is unoccupied, investor owned, or bank owned, bring a contractor with you to the home before writing an offer. Understand as much about the home and potential value before writing the offer. Read any reports carefully. Look for “further investigation” items that will indicate what can’t be seen or assessed by the common inspection.
8.) Offer the highest price and make sure your agent presents a clean, organized, per listing agent instructions offer. Offers should have a cover letter highlighting key components of the offer. A pre-approval letter is necessary. A personal letter explaining to the seller why you believe this home is best for you works in certain situations. Proof of funds to close, copy of earnest money check, and a clear, legible, contract with appropriate boxes checked. A sloppy agent can lose your deal. Ask your agent how they will present your deal. Very rarely is a buyer’s agent able to present to the seller in person but presenting a clean and organized offer to the listing agent can certainly help your offer make it to the top of the pile.
9.) Offer the highest price and be the only offer. Timing can make a difference. Once you have been house hunting and lost out on a couple of homes by a day or an hour, suddenly you are now obsessed with the MLS (Multiple Listing Service) and learn to pounce. This is why looking at a variety of homes and not being afraid to make an offer helps. There is no perfect house, but the sooner you can spot a solid deal, the better chance you have of beating out the buying competition. You can request a quick response. Standard is 3 days. Don’t assume a bank owned seller will respond to this tactic but private sellers may. This can also help when you have your eye on different homes at the same time. Make sure you and your agent know the deadline (if any) to accept offers.
10.) If you can’t offer the highest price offer, do as many of the items above as possible. The highest price does not always win. A strong offer, presented by a professional REALTOR®, from a committed buyer can win the deal many times. It can be hard to lose an offer on a home you wanted, but I am a firm believer in the fact that there will be another home that is a better fit in one way or another for each buyer. Be diligent. Be honest. The real estate world will move your way. Eventually.