You’ve certainly heard about the strength of the real estate market. A perfect storm of low inventory, attractive interest rates and big buyer pool has made it one of the hottest markets in decades. The tables are definitely tipped in favor of Sellers. So how does a Buyer compete? Here are some winning strategies.
Have the Right Mindset
Competing with several Buyers for the same home can be nerve-wracking. Enter fully understanding that the market is highly competitive and that you’ll forced to make uncomfortable decisions. You’re going to feel pressure. You’ve got to get to the house fast; decide quickly; and get ready for a competitive battle.
Understand the Levers
There’s only so much you can do to make an offer attractive to sellers. It ultimately comes down to two things: price and contingencies (reward and risk). The offer price gets most of the focus. However, contingencies are important too. Financing, appraisal, inspection, and testing contingencies are all viewed as risk by the seller. Which of these might you be willing to waive? Earnest money is how a Buyer demonstrates their commitment to a property. Three to five percent impresses Sellers. Align your closing date with Seller’s needs and consider giving them a few days after closing to transition to their next home. Savvy Realtors can help you package the best combination of price and terms to create a winning offer package.
Best Offer Upfront
You may never have a second chance to improve your offer when competing with several other Buyers. So, don’t hold back for subsequent negotiations. Always lead with your best offer.
Know your Limits
Always have a clear understanding of your limits. You don’t want to win just for the sake of winning. Know what you can afford and your tolerance for accepting the risk of no financing, appraisal or inspection contingencies. No one benefits if Buyer’s Remorse sets in later.
Be Ready to Move Forward
Earlier this year, I represented a Buyer that competed with 22 others for the same home. That’s less than a 5% chance of winning. I’ve also worked with clients who wrote an offer that was $50,000 over the asking price and didn’t win. I have Seller clients that got well over $100,000 over their original asking price. Stories like these abound. The reality is that the probability of having the winning offer can be low. So, do your best to not get emotionally attached to any particular home, and be ready to move on. An even better home may be in your future!