How to Make a Competitive Offer on a Home in a Seller’s Market
In today’s real estate market, sellers hold a significant advantage, and buyers nationwide are facing the challenge of how to make a competitive offer on a home. The current landscape differs from previous times, with a notable reduction of approximately 40% in active listings in PA between April 2020 and April 2023. Bidding wars and offers surpassing the asking price are not uncommon and properties are often under contract shortly after being listed. Additionally, interest rates have increased from their historically low levels, further impacting the market dynamics. When formulating offers, it’s important for buyers to understand how these factors affect their approach.
Keep reading to learn how to make a competitive offer on a home that gets accepted – or reach out to the team at Quaint Oak Mortgage to start the mortgage application process!
4 Tips for Making a Competitive Offer on a House
Making a competitive offer on a house is key to winning in this market and gives buyers the chance to own their dream home. While the coined phrase “Cash is King” certainly remains true, not many buyers have the hundreds of thousands of dollars readily available to purchase a home without the use of financing. Cash offers are attractive, even if priced lower than others, because they do not have the same limitations that traditional financing options do. The next best thing to cash, a conventional loan, will typically require an appraisal to ensure the market value of the house is equal to the purchase price. Here’s what to know about making a competitive offer on a house that will set you apart from other buyers:
1. When It Comes to Financing, Ensure That You Get Prequalified by a Reputable Lender.
When the seller reviews your offer, the listing agent will surely be advising which lenders to avoid based on past experience. The quality of your prequalification also has a lot to do with your lender’s ability to close by the date on the proposed sales contract. At the end of the day, the lender you select should help convey to the seller that you are a well-qualified buyer and the closing will happen in the negotiated timeframe.
2. Who You Work with Matters.
Equally as important, you’ll need a trusted realtor like our affiliate Quaint Oak Real Estate, willing to go above and beyond to get you into the home of your dreams. They are tasked with finding a home that will accommodate your needs and serve as an intermediary when it comes time to negotiate.
3. Get Creative.
Due to the current market environment, sellers can typically expect to see multiple offers on the table. As a buyer, you may need to get creative to help your offer stand out amongst the rest. These are a few options to consider.
- Appraisal Gaps – Most financed home sales will require an appraisal to be completed on the property, regardless of the loan program. Lenders can only lend up to a certain percentage of the home’s appraised value, and deals can be terminated, with an appraisal contingency, if the buyer is not willing to pay that difference out of pocket or if a new sales price cannot be negotiated. If the purchase price is higher than the appraised value, an appraisal gap is a clause that states the buyer will pay ‘x’ dollars over and above the appraised value.
- Seller’s Transfer Tax – When selling a home, many states require that transfer taxes be paid based on the purchase price of the home. Covering this cost for a seller may help your offer stand out as it allows the seller to net more funds at the settlement table. This strategy can help you outbid slightly higher offers as the total amount of taxes are directly proportionate to the purchase price of the home. Meaning when an offer outbids you by $1,000 for example, the seller will be more likely to take your offer because the transfer taxes are likely more expensive.
4. Don’t Give Up!
While the market may be slightly more difficult to navigate than in past years, that’s no reason to discourage you from achieving homeownership. There are many professionals that will do everything in their power to help you reach your goals.
Get Pre-qualified for a Mortgage with QO Direct
Are you ready to make a competitive offer on a home of your dreams? In an effort to help guide prospective homebuyers through the mortgage process and ensure fast pre-qualifications, Quaint Oak Mortgage has developed QO Direct. Our native IOS and Android app provides borrowers with a streamlined platform to submit their mortgage application, sign and upload documents, and track their loan status throughout the home buying journey. Download QO Direct today!
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