In today’s hot housing market with hundreds of new and pre-owned homes available, it is not as hard to find a dream house as it once was. The trick now is to be able to buy the house – having a good credit rating, adequate loan, and making monthly payments may not be enough. Today’s real estate sellers are looking for better deals, and savvy buyers know just how to entice them to close the deal. These five tricks are easy to implement and can help any eager buyer secure their dream home.
For decades, realtors have required an earnest money deposit from prospective buyers to show their honest intentions when making a bid on a house as well as to demonstrate that they do, in fact, have the means to support the purchase. What many buyers don’t realize, however, is that earnest money can be an alluring carrot to lead the seller to a contract. Most home sales require a $1,000 earnest money deposit (the money will eventually make up part of the buyer’s down payment), but choosing a larger figure will catch a seller’s eye. Earnest money is legally binding – if the buyer pulls out of a contract without just cause, they forfeit that money to the seller. By being willing to literally put their money where their mouth is, buyers demonstrate their sincere desire to purchase a home and encourage a seller to accept their bid.
Money is a universal language in the world of real estate, and offering a bid higher than the seller’s asking price is a sure way to get their attention. Naturally a buyer wants the best deal possible for themselves as well, but when bidding wars are imminent, low-balling an offer can easily result in a missed opportunity. An above-asking offer does not need to be substantially higher: a few hundred extra dollars can go a long way toward securing a contract.
Incremental Price Increases
Buyers who are unable or unwilling to offer flat sums above a seller’s asking price are not automatically excluding themselves from a competitive deal. Another option is to stipulate incremental bid increases in the sales offer. For example, a potential buyer may state one dollar amount as their initial offer, while agreeing to pay $500 or $1,000 higher than any competing bid up to a certain cap. Not only does this guarantee the seller the best deal, but it also lets the buyer get the best financial break possible by not making the entire offer at once. The seller will be required to verify competing bids, so the buyer’s offer is protected from exploitation and false claims just to increase the dollar amount.
Most sellers are eager to vacate their homes, if they haven’t already, when they place the home on the market. It can take weeks to close a sale however – applications, home inspections, and negotiations must be complete before the sale is finalized and the money transfers to the seller. In the meantime, the seller is responsible for taxes, insurance, and payments on the property. A buyer who offers a quick contract can assume those expenses sooner and take possession of their new house more quickly, streamlining the process of both buying and selling a home. Buyers who want to use this trick, however, need to be prepared: getting prequalified for a mortgage and having a down payment readily available will help move a contract along more quickly. In many cases, it is possible to finish a home sale in less than six weeks, a timeline that may be very attractive to a seller with other commitments.
One step that often holds up contracts and delays sales – possibly shutting a buyer out of their dream home – is the tedious process of inspections and repairs stipulated in the sales contract. While the buyer should certain there are no significant or volatile problems with the home before they purchase it, requiring the seller to fix every scuff, scratch, or chip is both time consuming and potentially deal-breaking. A buyer willing to undertake minor repairs on their own time and with their own money can make their offer much more attractive to a seller. In fact, because the seller will not be paying for some of those repairs, the buyer may be able to strike an even better bargain in the process.
With the housing market on the rebound, many prospective buyers may find themselves rejected even with reasonable buying offers. By using earnest money, higher sales prices, incremental bids, fast contracts, and less picky repair conditions as part of the negotiating process, buyers can find themselves with a great deal on the home of their dreams.