One of the biggest surprises during this pandemic is how hot the California real estate market has been. Just ask anyone who has been trying to purchase a home. The competition is fierce! Demand continues to outweigh supply, so it’s important to be smart and even a little aggressive when you find a home you can’t live without.
If you’re shopping for a new home and have yet to be successful, read on for some effective ways to get your offer accepted. All of these ideas will be attractive to a seller and could help you rise above the rest in a multi-offer situation.
Getting pre-approval from a local, reputable lender, is critical to setting yourself up as a serious buyer in a seller’s eyes. Getting pre-approved will not only give you a better understanding of how much home you can afford, but will also save you time and give you better buying power.
Know What The Seller Wants
The real estate community may be large, but it’s tight knit. The agent representing you should be making phone calls to the listing agents on the properties you are interested in so you can write an offer that meets the seller’s goals. Perhaps they want a short escrow period or maybe they’re looking to rent back the home. Whatever it is, have an understanding of it so you can write a compelling offer.
Increase Your Earnest Money Deposit
While it is customary to put down between 1-2% of the purchase price in the form of an earnest money deposit, that doesn’t mean you can’t increase that amount. An earnest money deposit demonstrates that you’re a serious buyer, so upping the ante here will show just how much you want the home. You way even want to consider releasing your earnest money deposit early to the seller.
Shorten The Inspection Period
For some sellers, the timeline is more critical than the financial piece of selling their home. If you can shorten your inspection period and contingency period and help get the escrow closed even quicker, you may be more attractive to certain sellers. Homes often fall out of escrow during the inspection period, so shortening this timeframe can be super attractive to a motivated seller. If you choose to do this, ensure you have contractors/inspectors at-the-ready so you can conduct a thorough inspection quickly.
Cover Your Closing Costs
When it comes to competitive home markets, buyers who offer to cover their own closing costs usually win. Closing costs help pay the lender and other prepaid expenses for funding the escrow account. Try to cover these yourself if possible!
Include Escalation Clauses
Have you ever been outbid for something on eBay? Many buyers will go in and bid with the highest amount they will pay, but eBay only incrementally increases the purchase price as other buyers enter into the auction. You can do something similar in real estate with escalation clauses. Think of it this way: you put in an offer on your dream home, but someone else comes along and outbids you. An escalation clause written into your offer usually says that you will beat any additional offers the seller receives by $1,000 up to your best and final purchase price. This usually works best when there are not several other offers though, so speak to your realtor to determine the best course of action.
Sometimes, a home sells much quicker than a seller anticipates, and this can lead to panic when they realize they soon will have no place to live. But as a buyer, you can be a hero by giving them the chance to rent the home back from you, and some buyers even offer a free month of rent. This can be negotiated depending on both of your needs, but this gesture of goodwill could help set you apart from other buyers.
As they say, the early bird gets the worm! Sometimes, the secret to getting a “yes” is as simple as being the first in to see the home and the first to write an offer on a property. Be sure to have automatic alerts set-up with your real estate agent so you will instantly be notified about new properties as they hit the market.
If there’s a date set for when sellers are reviewing offers, make sure that your agent is talking with the listing agent frequently, but not bugging them. Another great tip is to have your lender call the listing agent to ensure the confidence in regards to their ability to afford the loan.
I’m a local real estate professional who has decades of experience in the Pasadena area. I am available to assist you in buying or selling a home, so please contact me if you would like to schedule a time to discuss your needs. Please be well and stay healthy and safe!