Making a winning offer on a home in a seller’s market is like trying to say the alphabet backwards. It’s not easy. Sellers are focused on getting the highest price possible for their homes. While buyers continue to struggle in understanding how to get an offer accepted on a home they love. Not to mention, keeping up with constant home value increases.
So what gives? Our team at Trelora created this list of options to help buyers optimize their offers. But remember, every buyer’s situation is different. Before using one of these strategies, consult your real estate agent, and your lender to ensure it is a good option for you.
Offer More than Asking Price
A seller’s market typically isn’t the place for making low offers on homes and hoping you get a deal. In a hot market, coming prepared with your pre approval letter and offering purchase price likely won’t win you the home. The most direct way to get an offer accepted when you know you’re likely up against multiple bidders is to offer over asking price. But, it’s important to note this advice only applies when the market data support an over asking price offer. Again, we recommend speaking with a Trelora agent to understand your options.
Often, for many buyers it takes submitting multiple offers for asking price, and still losing the home to realize this seemingly drastic option is the best route to take. Say a buyer submits an offer on 5 different homes over the course of 2 months. They could end up facing even more competition for fewer listings as the market continues to change. Plus, as home values continue to increase, buyers may end up paying more for a similar home just months later.
Many buyers feel they are being competitive by making an offer for asking price. Especially given the increase in home values across the country. However, buyers still largely outnumber the amount of homes for sale. Thus it often takes more than asking price to win a home.
How to Get an Offer Accepted: Consult the Data
Before making an offer that is over the asking price of the listing, it’s essential to consult the data for your local market. The market trends and historical home value increases need to justify the amount you plan to offer for the home. With that, ensure the offer you’re considering also fits your personal budget. Otherwise you could run into problems when the time for an appraisal comes around.
Lower your House Hunting Budget
In a sellers market much like we’re experiencing today, it’s almost become the norm to see homes sell for thousands of dollars over list price. So, to combat this it can be helpful to lower your budget in order to give yourself the flexibility to make higher offers when buying a home. For example, say the last three listings in your desired neighborhood have each sold for $20,000 to $40,000 over list price.
It’s unlikely you’re going to win your dream home for list price in the current market. Instead, look at the current list-price to sale-price ratios in your desired areas. This helps you understand how to make a competitive offer that gets a seller’s attention. Many homes are getting upwards of 10 to 20 offers. The buyer’s who win the bidding war don’t stand out because of their letter to the sellers. Instead, the winning buyer makes an offer based on the home’s fair market value in comparison with the most recent nearby comparable sales data. We’re here to remind you that your real estate agent can help you determine this amount to make sure you get it right.
By lowering your budget you can look at homes you know you can confidently afford. Then when it comes time to make an offer and the comparable sales data shows comparable homes selling for $15,000 over list price, you can confidently offer over asking price, knowing the home is worth that.
Add an Escalation Clause
An escalation clause could be the answer when asking how to get an offer accepted. This is added to an offer in an attempt to stay ahead of the competition. And, ultimately win the home during a bidding war. More specifically, the escalation clause is a section with a real estate contract. It states that the buyer is willing to increase their offer on the given home, in the event that the seller receives a higher competing offer. The escalator states how much the buyer is willing to increase the offer by and their overall spending limit. Ultimately, the goal of the escalation clause is to protect buyers if another competitor tries to outbid them.
The escalation clause can show a seller how serious the buyer is about winning the home. For example, a buyer submits an offer of $250,000, but includes an escalation clause. The clause states that the buyer is willing to increase their offer to a maximum of $275,000. Thus, if a competing offer of $255,000 is submitted, the escalation clause allows the original offer to stand and compete to beat this new offer.
Are you considering including an escalation clause in your contract? Then be sure this makes financial and legal sense for your situation. We recommend consulting a lawyer, and your lender in addition to working with a real estate agent to ensure this is an option for you.
Make a Larger Down Payment
Escalation clauses or offering over asking price aren’t options for everyone. So, how else can you get an offer accepted on a home? Consider making a larger down payment. No matter what type of mortgage loan you secure, offering a larger down payment offers a sign of good faith. With that, by providing a larger down payment, buyers send the message that they are serious about the home. Sellers see this and can assume the buyer is ready to meet all associated financial requirements.
Highlight Your Ability to Close
As you consider how to get an offer accepted, remember, a good deal that doesn’t close isn’t actually a good deal. In 2021, the cancellation rate for real estate contracts was 38%. As a result, it’s no wonder listing agents advise sellers to give top priority to offers with not just a strong price, but a high likelihood to close.
As a buyer, there are a few ways to increase your offer’s ability to close. It also helps to be aware of common deal breakers:
- Low appraisals
- Loan approval failures
- Inspection findings
There are a few options buyers can consider to make a strong offer. But it’s important to note these should be carefully evaluated.
Purchase As Is – It’s possible to submit an offer stating the buyer agrees to purchase the home in “as is” condition. There are ways to make this offer while retaining your right to an inspection and loan contingencies
Shortened Contingency Period – This assures the sellers the transaction will close sooner rather than later
Making a Cash Offer – If this isn’t an option for you, consider making a large down payment if your financial resources allow.
The bottom line in creating an offer with high closability is evaluating your personal position and what risk you’re comfortable with. As real estate agents, Trelora is unable to provide legal advice. Please, do not incorporate these tactics unless you’ve conferred with a lawyer and your lender.
Limit Your Requests
At this point you’re probably asking yourself how to get an offer accepted if it isn’t a cash offer. While not everyone can make a cash offer work, typically buyer’s can find a few ways to be flexible when it comes to inclusions and seller concessions.
As a buyer in a seller’s market, it’s essential to have a pre approval letter from your lender for every offer you submit. By doing this you ensure the seller has all necessary documentation that relates to your offer. Rather than the listing agent reaching out for this proof and delaying the offer review process.
How to Get an Offer Accepted: Inclusions to avoid
If you are a buyer competing with multiple other offers, it probably isn’t a great time to ask the seller if they can live their washer and dryer behind. This especially applies to items that are listed as excluded according to the MLS listing. Essentially, ask yourself, is requesting this item work risking losing this home over?
Many buyers are familiar with the appraisal contingency, but the inspection contingency is a close second in terms of risk. Typically, most offers include a contingency that allows the buyer to cancel the transaction if the inspection reveals major issues with the home. Some buyers choose to waive their right to this contingency in order to make their offer stronger. But, this is a huge risk and not one we recommend at Trelora.
There are a few circumstances where waiving your right to an inspection is slightly less risky. For example, purchasing a new or relatively new construction home that is well cared for. Or, purchasing a home from a friend or family member and being able to view the repair records while knowing the home was well maintained.
If the home you’re considering doesn’t fall into either of these categories, you may be buying a home that looks great on the surface, but could cost you thousands of repairs after the transaction is complete.
If you find a home and choose to take the risk of waiving the inspection contingency, be sure to do an in depth walk through of the home before making your offer. These are a few key items to note:
- No cracks in the foundation or visible history of water damage
- Faucets, toilets and showers do not leak or have an odor
- Gutters are secure, clean and direct water away correctly
- Garage door works correctly
- All lights and outlets work
- All appliances work
A workaround for this is to consider making the length of time you request for the inspection period as short as possible. This way the sale can move forward to its closing date as quickly as possible.
Work with an Expert
Some could argue this should be the first step taken after considering how to get an offer accepted. Working with an expert real estate agent can make the process of buying a home much less stressful, even in a sellers market.
A good real estate agent is experienced in your local market. They should be able to provide accurate market data, including comparable sale information. Ultimately, an experienced agent can provide expert advise to make your offer more competitive, and may even have information on new listings before they hit the market to give you an edge on the competition.
It’s important to maintain open lines of communication with your agent. This way you can move quickly on new opportunities, and ultimately, with patience, win your dream home.
Christina Parker co-founded Trelora’s North Carolina branch in 2020 and has successfully closed 330 deals as an agent. She was promoted to Market Director in 2021 as Trelora expanded to serve homeowners in Charlotte in addition to their hub in Raleigh.