Concerned about bidding wars? Make your offer to purchase stand out
Many home buyers across the Metrowest are surprised by the low number of available homes for sale at the moment. According to the Greater Boston Association of Realtors, there were 28 percent fewer homes on the market this January than the same time period last year. The low inventory is spurring bidding wars on many properties. So how can you make your bid stand out? Here are some tips for making your offer more competitive – without getting in over your head.
Get a sense of the market. Be sure you have a good sense of the market and area home values before you dive into a bidding war.
Line up financing. If you’re getting a mortgage to pay for the home, be sure to have a pre-approval letter in hand from a reputable lender before you start house hunting. This way if you face a multiple bid situation you don’t have to rush around getting your letter ready. Once you find a lender, ask them approximately how long it should take to close on the home once you have an accepted offer. This way you know the timeline you’re dealing with when you present your offer. Note: If you’re paying cash for the home, you’ll need to have verification of funds in hand to present with your offer.
Don’t jump too fast. It’s easy to feel pressured into making a decision on a home when there are multiple bids being presented. Trust your gut. If you’re hesitating on making an offer, there’s probably a reason for it.
DO YOUR RESEARCH
Once you find the home you like, your buyer’s agent should find out the following information before presenting your offer:
When are offers being presented? And how many are being presented? The listing agent is obligated to disclose if multiple offers are being presented. Note: The number of bids presented may change quickly, particularly for a home that’s in high demand.
Are there terms that are particularly important to the seller? Knowing the terms that matter to them will help you make your offer more appealing.
Does the listing agent have a buyer who is presenting an offer? If so, your agent may request that the listing agent involve their broker/manager in presenting the offers to ensure fair treatment for all potential buyers.
Is there a seller’s disclosure? Many homeowners will complete a disclosure statement when selling their home. If they did so, be sure to read it carefully so you’re aware of any known issues with the property.
Keep your emotions in check. Look at your finances carefully ahead of time so you know the amount you’ll comfortable paying. This way you won’t get swept away in the midst of a bidding war later.
Don’t hold back. That being said, this is no time to be coy. In a multiple bid situation you may have only one chance to present your best offer, so put it on the table and let your agent go to work presenting it for you.
Let go of the little things. If you’re the only bidder it’s perfectly acceptable to ask the seller to take care of a minor repair or to include an additional item or two, such as the washer and dryer or window treatments, in the sale of the home. However, asking for these items in a multiple bid situation can make you seem picky.
Look beyond the list price. What’s important is not what price the homeowners are asking, but what the home is truly worth. That’s why it’s so helpful to have a real sense of home market values in the area when deciding what this particular home is worth to you.
Demonstrate the best financing. Buyers who are presenting a larger good faith deposit and/or larger downpayment are more likely to be considered seriously.
Eliminate unnecessary contingencies. For example, offers with a home sale contingency are often disregarded altogether.
Consider how to handle the inspection. Offer a short timeframe for conducting your home inspection. Also, your offer may be more attractive if you’re willing to forgo credits for minor home inspection repairs. (Note: In most instances I would strongly advise against forgoing a home inspection altogether. This is an important protection when you’re buying a home.)
Consider cash. If you have the ability to pay cash for the home instead of financing it, this will make your offer much more attractive. If you’re considering this option, talk with your financial advisor to understand any tax implications of doing so.
Get it in writing. If you’re notified that you’re the winning bid, be sure your buyer’s agent gets the offer paperwork signed by the seller as soon as possible. The seller’s acceptance of your offer is not legally binding until they sign the offer paperwork.
Reprinted from my MetroWest Daily News column in the Metrowest Homes publication, a real estate resource for residents of Dover, Holliston, Hopkinton, Sherborn, Southborough, Sudbury, Wayland, Westborough, Weston & beyond.