With the passing of February and the impending arrival of spring, many buyers are shifting their focus back to their home search. And as more and more buyers comb through listings online and hit the pavement looking for their next home, they’re all running into the same obstacle: there are still not many houses to choose from. January ended with 4,899 active houses on the MLS in the 10-county metro area (Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, Park) which is 23% less than the 6,372 active at the end of January 2019. The end of February has even less inventory than January, currently sitting at roughly 4,400, partly because of the poor weather and because buyers are already out in force.
More buyers and fewer homes means more multiple offer scenarios. Here are 7 tips to help your offer stand out from the pack:
Go easy on the inspection
If you add some language to your offer that says you’ll only be focusing on health and safety items during the inspection phase, it will give sellers the confidence that you aren’t going to be a nit-picky buyer. Sellers know that most deals that terminate do so at the inspection phase, so anything you can do up front to alleviate this fear will help.
Add appraisal gap coverage
Anytime you’re offering $5,000 or more over the asking price, there is a chance your bank’s appraisal may come back lower than the contract price. If you let the seller know up front that you’d still be interested in buying their house even if that happens, they know that’s one less hurdle they have to get over in order to get to the closing table.
Write a personal letter to the seller
Selling a home is a very emotional process for most sellers, so tapping into a seller’s emotions is one way to win them over. Focus on the things that are easy for sellers to relate to: your background, your job, your family, your pets, etc. And always include a picture!
Increase your down payment
Sellers view buyers with higher down payments more favorably than they do buyers will lower down payments. Talk to your lender to find out the maximum down payment you can possibly make and get as close to that as you can.
Put down more earnest money
Earnest money is a way to show sellers you are serious about their house, and it is generally refundable, if you reasonably back out of the contract before closing. Sellers view earnest money as a sign of a buyer’s financial stability. If you have the ability to submit more earnest money than is being requested, sellers will have no choice but to think your finances are rock solid.
Avoid escalation clauses
The way an escalation clause works is that you specify an initial bid for the home, and then state that your bid will escalate above a competing offer up to a certain limit. As an example, you may offer $450,000 for a home, with an escalation clause that beats a competing offer by $2,000 up to $475,000. Instead, sellers want to see your “highest and best” offer right out of the gate. You’re never guaranteed a counteroffer or a second chance to submit another offer, so you’ll want to make sure your first offer is your best offer.
Give your commission rebate back to seller
Buying with Trelora gives you a unique advantage because we split our buyers’ agent commission with our buyer 50/50, and so you’ll have an average of $7,500 in commission refund to play with. You can use that refund to furnish your new house or cover closing costs, but if you really want to win a multiple offer scenario, consider making your offer stand out by offering to give some of this back to the seller. Sometimes that 1.4% (or however much you decide to offer) of the purchase price can be the difference between purchasing your dream home and missing out on it altogether.
If you aren’t sure whether it’s a good time to buy, Trelora’s agents are happy to help you. Sign up for our mailing list to get monthly updates on the state of your market. Or, reach out to a Trelora agent to find out the best time to buy a home!