June 23rd, 2011
There are ways to get ahead in the bidding war that will help your offer be selected.
1. Be first
If you are not working with a buyer’s agent, you should be. Make sure that the agent knows that you want to jump on any appropriate properties as soon as it becomes available. Also, put a tight deadline on your offer so the listing agent can’t use it to solicit other offers from interested buyers.
2. Be pre-approved
Although you likely can’t pay all cash, if you have an approval from a lender saying you’ll qualify for the necessary loan, you’ll be in a stronger position. Because lending standards have toughened, be prepared to make at least a 20% down payment. To prove you’re serious about buying, offer the seller a substantial earnest-money deposit as well – up to 3% of the purchase price.
3. Be highest
Obviously, sellers want to the the highest price possible for their property, so a generous offer will trump an all-cash one. But ask your agent to do a comparative market analysis first so you don’t pay more than the market price. If you do, your deal could fall through – or you’ll be asked to put up more cash – once the lender has the property appraised.
4. Be Easygoing
A recent survey done by the California Association of Realtors found that three-quarters of all sellers are putting their property on the market because of financial difficulties. While it isn’t suggesting that you waive an inspection contingency, don’t demand any monetary concessions, like a decorator’s allowance, or help with closing costs.
Similarly, ask your agent to find out if some accommodations on time would suit the seller’s needs – perhaps a quick closing date for a seller who is having trouble paying the mortgage, or conversely, a long rent-back after closing for sellers who need time to find another place to stay.