In a hot real estate market it’s easy to let your emotions get involved possibly resulting in making a poor real estate investment. It’s not uncommon in today’s market for buyers to waive inspections or pay an amount over the listed value in order to get the home of their dreams. Instead of risking your investment with emotional decisions, we’ve put together some more creative ideas to help your offer stand out.
Here are 8 tips for standing out in a bidding war:
1. Personal Letter
A new trend we’ve seen is to include a personal letter to the sellers introducing yourself and why you want to buy this home. If possible, make your letter stand out by referencing a specific item or feature in the home. Consider adding a photo of yourself or your family if you feel comfortable. Individual sellers and even estates can often be swayed by a personal touch. However, if you’re putting in an offer on a foreclosed home, a personal letter won’t be of much help.
2. Flexible Closing Dates
Sellers may need to close on the home by a specific date. If your agent is able to discover their specific timeline, do your best to follow it. If you are unsure of the timeline, include a clause stating you are flexible on closing dates based on the seller’s needs.
3. Include an Escalation Clause
An escalation clause states that you will pay a specific amount over any of the additional offers up to the maximum your budget allows. This helps to avoid a stream of counter proposals and move to a deal quickly. Make sure you have consulted with your Certified Financial Planner®, mortgage lender, and real estate agent to determine your highest offer.
4. Buy with Cash
If you have the ability to buy a home with cash, you will often have a huge leg up in a bidding war. Cash offers allow more flexibility for closing dates and are able to move more quickly, making them more appealing to sellers. Plus they don’t ‘fall apart’ due to financing issues nearly as often. Discuss the idea with your financial planner before committing to using a large amount of cash.
5. Don’t Include Contingencies
It’s not generally recommended to waive an inspection contingency as you want to ensure you are making a good investment, but there are a few other contingencies you could waive to make your offer stand out. For instance, an offer without a contingency to sell a current home will be more appealing than one where a buyer has to sell their own property first.
6. Pad the Earnest Money
Earnest money is in place to prove you are an able buyer. If you are looking to really stand out, offer to pay more than the sellers are requesting in earnest money. This shows you are a strong buyer and able to secure financing.
7. Include an Inspection Waiver
Getting an inspection on your new home is highly recommended. However, there could be some ‘wiggle room’ you can write into a contract. Consider including a clause stating you will not ask for inspection items to be addressed if they are under a certain dollar amount and pose no immediate health or safety risk. This type of clause can give sellers a sense of security and help sway them towards your offer.
8. Keep in Touch
Even if you don’t win the deal initially, keep in touch with the selling agent, or at least keep an eye on the status of the deal. If the property comes back on the market, the sellers may be more inclined to sign with a buyer who previously submitted an offer.
As with all investments, discuss your budget for a home with your financial planner before you even begin the house hunt. They may have a trusted real estate professional or a mortgage broker they can refer you to as well. Schedule an appointment with us today to review all of your investments — even real estate!
