As you might already know, inventory for homes priced under $500,000 is tight. When these homes come on the market, they’re likely to receive multiple offers. If you’re looking to buy a home in Denver, there are a few strategies that will help you win in a multiple offer situation.
- Be first in line. Being the person with the first offer presented to the seller is important. For some reason, sellers always love the first offer on their home. Sometimes a seller will choose your offer over one that’s identical just because you were first in line.
- Agree to buy the home as-is and to only negotiate major health and safety items. This lets the seller know you won’t nickel and dime them after the inspection. You’ll still have an inspection, and if you find anything wrong, you still have the opportunity to terminate the deal or ask the seller to fix some of the deficiencies with the home. It lets the seller know we aren’t going to play games after the inspection and that you’re a serious buyer only concerned with the major health and safety items.
- Get pre-underwritten by your lender. Getting all your financial documentation to your lender as early as possible lets you present the file to an underwriter who can then approve it only pending an appraisal. This lets you submit your offer to the listing agent with full approval for the home loan. All you need is the appraisal, and then you’ll be ready to close.
- Be able to offer a quick close. Some of the lenders we work with can close as quickly as 14 days, which helps your offer compete with cash offers. If you’re competing against other financed offers that typically close in 30 to 40 days, you can better that time frame by half.
- An escalation clause. This means your offer automatically escalates by a certain dollar amount to beat out any other buyers up to a certain amount. That way, you won’t lose out on your home over just $5,000.
“There are eight ways you can strengthen your offer to beat the competition.”
- Offer a larger earnest money or escrow deposit.This shows the seller that you’re very willing and able to purchase their home and that you’re willing to put a little more skin in the game.
- Bring the price difference if the home doesn’t appraise.Homes in a bidding war can get blown up tens of thousands of dollars over the asking price in our market. The seller wants to know that if the home doesn’t appraise, you can and will pay the difference between the appraised value and the actual purchase price. You can put a clause in the contract agreeing to pay a certain amount above the appraised value to let the seller know what their bottom line proceeds will look like before the appraisal even happens. This is a strong tactic, but we try to keep it in our back pocket so we can keep our buyers from overpaying for a home if we can help it.
- Offer a post-occupancy agreement (or seller leaseback) to the seller. You would close on the home and become the new owner, but agree to lease the home back to the seller for 15 to 30 days after closing to let the seller rest easy knowing they’ll have enough time to find their next home and move out in time for you to take possession. This comes with risks and challenges, but it can really help you win the home you want.
If you have any other questions about winning the home you want in our market, don’t hesitate to give me a call or send me an email. I’d love to help you!