Last Updated on July 31, 2023
We’re quickly entering the time of the year where listings tend to peak, as the May and June housing frenzy spikes. While this is certainly a great time of the year for buyers, inventory challenges mean competition for homes that are desirable and priced appropriately will be tough. To help you bring your ‘A’ game to the next home offer you write, we’re offering five of our best strategies for winning bidding wars in today’s market.
Try a “rent back” agreement
A new strategy buyers have started using in droves that seems to be very popular with sellers is offering a rent-back (or seller possession after closing) agreement. Most rent-back agreements allow the seller to continue vacating the property, post-closing for a period of 30 to 60 days. This type of arrangement gives sellers more time to find a property, pack, finish out the school year, etc.
Setting up a rent-back agreement could involve the seller paying an agreed upon rental amount to the buyer (now known as the landlord) for the stipulated period of time. Most times this amount is paid at closing.
For buyers who have the luxury of being flexible, a rent-back agreement can easily make an offer rise to the top.
Make a larger down payment or pay in cash
Sure a 20% down payment can get you out of paying Private Mortgage Insurance (PMI), but it also might help you win a bidding war, too.
Worried about not getting to the closing table, many sellers look for favorable offers with larger down payments, indicating a more serious buyer.
Alternatively, with an all-cash offer, the strength is not having lending guidelines, including appraisals, as additional requirements during certain contract timeframes. But be prepared to offer the seller proof-of-funds if you plan to make a cash offer!
When a market moves swiftly like the one we’re in now, sellers don’t like the idea that their home might sit stagnant on the market for a while, leaving potential buyers to wonder what’s wrong with it—which is why anything a buyer can do to show they’re serious is always a plus.
Offer compelling terms
Any Realtor will tell you—rarely is the decision made to accept an offer solely on price alone. Typically, sellers make their decision after weighing several factors, with the terms of the sale being highly important.
While we’ve never recommended buyers waive appraisals and inspections, it’s smart to think about what might be most attractive to sellers, i.e. offering desired closing date, asking for little to no personal property, asking for no closings costs, etc. Essentially, the “cleaner” the offer with fewer contingencies, on top of presenting your offer with competitive earnest money can be very desirable to sellers.
Locally speaking In North Carolina, the due diligence fee and time frame are just two ways a buyer can significantly strengthen their offer in a seller’s eyes.
In South Carolina, a larger termination fee, or the waiver of some contingencies could significantly strengthen a buyer’s offer.
Get pre-approved
While this next tip is nothing new, it can’t be ignored. Most sellers in today’s market won’t even look at an offer if a buyer isn’t pre-approved, so it stands to reason that getting pre-approved is quite possibly the most important step you can take in the beginning of the home buying process.
You should do this before you ever step foot in a Realtor’s office and before you even browse for properties online. There’s nothing worse than falling in love with something only to find out you can’t afford it.
Start the process of getting pre-approved by shopping for the perfect lender. Look for a relationship-based referral with an emphasis on trust, relatability and experience. You want someone who will be there with you, application to closing, and every step in between. Customer service could make a big difference on the road to closing, even if all offers are otherwise equal.
Find the right Realtor
Find a realtor who has a great reputation in the real estate community and one who maintains a solid rapport with other agents. The realtor you choose should not be fearful of making a call to the listing agent prior to submitting an offer, in order to ask what’s most important to the seller. It is also crucial that you have a realtor who is adept at filling out contracts. There have been many times buyers have missed out in multiple offer situations because of sloppy paperwork submitted by their realtor, which becomes a very unfortunate situation all around.
Keep reading: What’s a buy down?
