In today’s low inventory market, finding the perfect home can be difficult. Most sellers are receiving multiple offers on their homes within weeks, or even days, of listing them. Below we have listed four things to keep in mind when the time comes to make an offer on the home you’ve been eyeing.
1. Know How Much You Can Afford
Knowing your budget and how much of a home you can afford is very important. While getting
pre-approved is a vital step in the homebuying process; it is a good idea to have an underwritten pre-approval letter. An underwritten pre-approval not only allows the lender to put a mortgage application through a more thorough initial validating process but removes most of the potential obstacles before approval is granted which makes a cleaner offer for the sellers. Being pre-approved with underwriting shows the seller that you are a serious buyer, plus it helps you learn what you can afford before you shop and will help you identify any potential issues before you make an offer.
2. Prepare For a Fast Pace
Homes that are going on the market aren’t available for very long. The
Realtors Confidence Index from the National Association of Realtors (NAR), notes that the average home is on the market for 17 days. This means, if you see a house on the market that piques your interest, you should act on it quickly! Having a skilled agent is important during these times, as they will help you to create a winning offer.
3. Make a Competitive Offer
Today’s market is very competitive, which means making a competitive offer is essential and most of the time you’ll have to go above asking price. According to
Lawrence Yun,
Chief Economist at NAR:
“For every listing there are 5.1 offers. Half of the homes are being sold above list price.”
When putting in an offer it’s a good idea to put in an escalation clause. An escalation clause is a clause or addendum to a real estate contract that notes the buyer is willing to raise his or her offer price if the seller receives a higher competing offer. It might just help you get your home, and not go to your highest price.
4. Make Sure You Are a Flexible Negotiator
In your mind, you might have made the perfect offer on the home you’ve been eyeing, but it’s likely the seller will come back with a counteroffer. Their counteroffer might include flexible move-in dates, minimal contingencies, or a higher price. If this happens, it’s important to consider them if you seriously want the home.
“Resist the temptation to waive the inspection contingency, especially in a hot market or if the home is being sold ‘as-is’, which means the seller won’t pay for repairs. Without an inspection contingency, you could be stuck with a contract on a house you can’t afford to fix.”
While not every home is part of a homeowner’s association (HOA), if there is one for the neighborhood you are looking in, depending on the state the home is in, you may be able to work within an HOA clause to schedule your inspection. Clauses such as an HOA clause allows you a specified amount of time to review the complex bylaws of the HOA, and if you see something in the rules that you disagree, with you can discuss with your agent to review your options with the home sale.
Bottom Line For Homebuyers
If you are in the market to buy a home, being pre-approved and making a competitive offer is very important. If you find a home that grabs your attention, you need to be prepared to put an offer on it quickly, since we are in a sellers’ market. Connect with our team today to get started on your homebuying journey with an experienced lender!
