How to Get Your Offer Accepted in a Competitive Housing Market

There’s a lot that goes into buying a home, and sometimes personal factors make it impossible to wait for ideal housing market conditions. If you find yourself buying in a competitive housing market, there’s plenty you can do to make sellers interested in your offer above others. Follow these home buying tips to get your offer accepted.

Buying a house in ideal market conditions can be confusing enough, so when conditions are less than ideal, you should partner with an experienced real estate agent. An agent has gone through the home buying process countless times and knows exactly what steps to take, how to navigate common issues, and which properties to invest time and effort in based on how well they align with your wants and needs. They’ll also know what lenders, inspectors, and service providers you should use to strengthen your offer.

Agents are great negotiators and will have well-honed skills and tactics to fall back on. They’ll know what you should add to your offer, how much you should be offering, and when a home on the market may be taking advantage of the competitive trends by overpricing. They’ll also know what the local trends are and what is affecting them. This provides you with the information you need to make an informed decision.

If your local housing market is a hot sellers’ market, then pricing too low will automatically disqualify you from the running. Offering too low or under the asking price can come off as an insult to the seller. Also, if sellers are receiving multiple offers, they might not take the time to try negotiating with you and your offer.

Work with your real estate agent to calculate the average price of similar properties in the area, then make a competitive offer. Although it should be above the asking price, it doesn’t have to be significantly over the asking price to be effective. Start off with $2,000-3,000 more, then work from there. In the long run, the additional fee won’t affect a monthly mortgage payment significantly, so if you’re seriously considering a property, show it with the initial offer.

Another tactic to consider when navigating a competitive market is to provide more earnest money. Putting down more earnest money shows a seller that you’re serious about making your offer, as the good faith deposit is added towards your down payment once an offer is accepted. Work with a real estate agent to figure out what amount is the best.

If you use this tactic, make sure you’re certain about wanting the property. Earnest money deposits usually average about one to three percent of the price of the home, and when you go over that amount, you’re putting more money in jeopardy if you don’t follow through on the purchase. For example, if you decide you don’t want the home after signing a contract, a seller can keep your larger earnest money deposit.

An escalation clause is an addition in a contract presetting a maximum amount that will outbid other offers. In other words, if another offer comes in that is higher than your own, you’ll increase your offer to a set amount until you reach your set boundary. This is a good way to show that you’re serious about beating out other competition, but it is still possible for somebody to overbid your amount.

Another factor to keep in mind with escalation clauses is how you’re paying for them. You may have used the original sales price of the home to qualify for a certain loan amount. If your escalation clause exceeds the borrowed amount, then you’ll have to pay for the difference out of pocket.  

A couple of other home buying tips to follow when making an offer on a home are to get pre-approved and pre-underwritten for a loan. Getting your mortgage pre-approved before making an offer shows sellers that you’re financially able to follow through. For extra negotiating power, send in your pre-approval letter with your offer to signal that you’re ready to complete the transaction as soon as possible.

Another step you can take to strengthen your offer is to pre-underwrite your loans. Pre-underwriting means that your lender is guaranteeing you will receive a loan amount up to a certain price. This indicates to sellers that your financial situation is reliable and in order, as well as cuts down on any financing contingencies in a final offer. This route is more time-intensive than a regular pre-approval, make sure you give yourself enough time to complete it.

When trying to get your offer accepted in a competitive housing market, make it as appealing to sellers as possible by minimizing contingencies or agreeing to a no-contingency offer. Contingencies related to finances, appraisals, or a house sale takes time, and closing an offer fast is appealing to sellers. Also, don’t ask for seller concessions or other negotiations, like asking for personal property.

Another way to make your offer more appealing is to add a reverse contingency, which gives the seller more leeway to find a new home or reverse the offer if they aren’t able to find housing. A similar option is a lease-back contingency, which is when sellers can rent the property from buyers for a set amount of time. This also gives a seller more time to search for housing while giving you the peace of mind of having a home to go to.

It can be daunting trying to buy a home in a competitive market, but that doesn’t mean you can’t find and purchase a home you love. With these home buying tips, your offer is sure to stand out on the market. When you’re ready to start your search for a new home, contact trusted local agent Samina Chowdhury to guide you through the process.