Here’s my advice for homebuyers who are looking in this seller’s market.
Today’s homebuyers are faced with a strong sellers’ market, which means there are a lot of active buyers competing for a relatively low number of available homes. Your dream home might be the dream home for 10 or even 100 other buyers.
Here are a few strategies you can use in a bidding war to avoid heartbreak and ensure victory:
1. Money talks. Traditionally, the best way to win a bidding war is to offer the most money. Although the highest offer isn’t always the one that the seller chooses, money does talk. Your real estate agent should be able to analyze local market data and help you to come up with an offer that will at least get you in the top three.
2. Remove or at least limit the seller’s risk. The offer to purchase a home usually includes a number of contingencies. These are loopholes for buyers to get out of the contract. To show the seller your commitment to buying their property, try to limit or eliminate your contingencies altogether. If you are not in a position to pay cash for the house, consider waiving the financing and appraisal contingencies. You may want to make a larger earnest money deposit as well. I know it’s risky, but think about possibly agreeing to purchase a home as is with no inspections. If you are not comfortable with it, shorten your inspection period to just a few days and offer a generous option fee. Sellers want certainty that the transaction will ultimately be executed according to the terms set out in the contract.
3. Accommodate sellers’ wants. Having knowledge of the seller’s needs and desires and tailoring that into an offer can also go a long way. Many sellers are also buyers and facing the same challenges that come with purchasing a home in a seller’s market. If they haven’t found a new home yet, maybe offer them a flexible leaseback agreement that would allow them to stay at their existing home for a month or two while they find a new home. If they have already moved out, try to close as soon as possible so that they don’t have to carry two mortgages at once. Understanding sellers’ situations is vital.
“It’s also challenging for sellers to pick the right offer in this market.”
4. Make your offer stand out. Consider writing a heartfelt letter about why you love their home while it is still legal to do so here in Texas. Many states have now banned real estate agents from presenting personal letters to buyers as it can be seen as grounds for violation of fair housing laws. Try and add some light-hearted humor—I have seen offers where buyers promise sellers free weekly cleaning service and pizza or ice cream delivery from their favorite restaurants.
One of my sellers was offered fresh flowers weekly for one year. Unfortunately, that buyer didn’t win the house. At the same time, my sellers are still talking about it. In fact, that gesture was so refreshing and meaningful to them that they stopped by the store to explain why they had to go with another buyer. Since then, the seller has purchased flowers and referred others to that buyer’s shop. Simple things like that certainly will not win you the house, but it could set you apart from other buyers and break the mental intensity. We all know that it’s tough for buyers right now, but not too many people realize that it is also challenging for sellers to pick the right offer.
5. Get an experienced agent to represent you. The joke is that right now we have more Realtors than houses for sale and it’s really not funny if you are a Realtor like myself. I am not going to talk much about getting at least one offer on every listing where the buyer’s agent is using an old contract that is no longer valid. I will, however, share with you another example that just happened yesterday. My sellers had a hard time choosing between two pretty much identical offers that we received. The sellers asked me to send them the sales records for each buyer’s agent. One agent had sold 40+ properties this year already, and another one had just one sale back in January. Like with everything else, experience matters. My sellers went with the buyer’s offer presented by a more experienced Realtor.
If you are looking for an experienced agent to help you navigate in this challenging market, whether you’re buying or selling, please consider working with me and I promise you will not be disappointed. Reach out via phone or email today. I look forward to hearing from you.
