Having a competitive bid in today's housing market

07/08/2021


Today’s housing market is sizzling and if you are a buyer, it can be difficult to find a home let alone be chosen as the winning bid. Following are a few options to consider putting into your offer and actions you can take to have the best chance of being selected as the winning bid. Remember though, winning at all cost could be problematic.
 
What are steps that can make your offer standout?
The very first is to make a cash offer and since most people can’t really do that the next best option is to have a pre-approval from a reputable lender. This signals to the buyer you can close which is an important component of a winning bid. It is also important to show that you can handle unforeseen closing issues which you can indicate by providing a larger earnest money deposit offer.
 
What is a typical issue in today’s market that can derail a closing?
Right now one of the biggest involves when the purchase price is higher than the appraisal. To mitigate this concern, put in your offer an appraisal gap guarantee, indicating if the appraisal is lower than the purchase price, you are willing to put more money down so that the closing can proceed.
 
Are there any red flags to avoid putting in your offer if you want to win?
Having several contingencies such as needing to sell your home or a specific timeline on when you want to close. The more flexibility in meeting the seller’s timeline the better. And the more certain you can make that you will close, the more likely your bid will stand-out.  Another area to consider is how you want to handle inspections.
 
Is it a good idea to just waive all inspections to make your offer better?
It might be better to not completely waive the inspection and instead make it a pass fail inspection. You agree that you won’t make the seller correct any of the inspection issues however, if there is a major problem you can walk away from the transaction. In this circumstance the offer usually includes that some of the earnest money is also forfeited to the seller.
 
Can automatic escalation clauses be a way to get the winning bid?
Automatic escalation clauses can work as long as your first offer was a significant offer and not a low ball offer. In today’s market, quicker counter offers can win the day and working with your realtor to have this clause in the offer can provide benefits.  However, don’t get carried away with having winning bid if will cause you any financial difficulties. Sometimes missing out on a house might be best outcome.

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