When you’re making an offer on a home, you want to be sure that your offer is as strong as possible. There are a few key factors that can make or break your chances of getting your offer accepted. If you’re not too keen on offering to pay someone else’s closing costs, and you don’t want to make crazy concessions that compromise your security just for the sake of securing a home in a crazy competitive market, then read on to learn more! In this blog post, we’ll explore what makes a strong home offer and how you can set yourself up for success.
Remember that we are not financial professionals and you should always consult with your real estate agent, attorney, lender, or financial professional before submitting offers to purchase real estate.
The First Factor Is the Purchase Price
When it comes to putting in an offer on a home, especially in a competitive market like the crazy seller’s market we recently experienced, the price of your offer on a house is an essential factor for consideration. It is important to ensure that your offer accurately reflects the value of the home so that you can present yourself as a serious and competitive buyer. If the asking price is significantly lower than what the market rate for that area would suggest, be sure to account for this when submitting an offer; likewise, if the asking price is higher than normal due to high demand, it may be beneficial to make a slightly above-market offer in order to stand out from other buyers. All of these factors should be weighed carefully before submitting an offer so as to maximize your chances of having it accepted.
The Down Payment
Making a strong offer on a dream home in a competitive market involves careful consideration of several factors. A key part of getting an offer accepted over those of other buyers is the size of the down payment. A larger down payment is a great way to show that you are serious and committed to buying the home and indicates to the sellers that their house is likely going into stable hands. Moreover, having extra money for the down payment can indicate extra financial stability, which all adds up when making a competitive offer on a home.
Mortgage Loan Pre-Approval
Having a loan pre-approved before submitting an offer is the third important factor to consider when creating a strong offer on a home. Being prepared financially shows that you are in a secure position and can make allocating funds much easier. Having this pre-approval demonstrates to the seller that you are serious and have done your due diligence; showing that you are ready to move forward with the purchase of their property. Securing a loan puts buyers in a prime position when compared to other offers, so it’s essential to be prepared prior to making an offer on any home. Get a pre-approval before you start shopping for homes.
Offer More Earnest Money
You can also offer a bigger earnest money deposit to be put in an escrow account throughout the duration of the home-buying process. In a competitive market, you need to prove you’re more serious than others, and sometimes, you have to prove that with more than just the purchase price you offer on a house. More earnest money signals to the seller and the seller’s agent that you are serious about buying the home, and, if there are multiple offers, it adds weight to your offer on a house you really want.
If you’re unfamiliar, an earnest money deposit is just that, a deposit on a home. When you make an offer on a house, you fork up a little cash, to most often be held at the brokerage office of the seller’s agent, that then gets put in a special escrow account to let the sellers know you’re in it to win it. If the sale doesn’t work out, most commonly due to issues that arise during a home inspection, you can get your money back. If the sale goes through, your earnest money gets put toward closing costs on your closing date. It’s nice at the end of a transaction, when you’ve spent money on other things, and anticipate spending more money to move, etc., to have a little cash in the form of that earnest money deposit waiting for you to cover some of those closing costs.
A Personal Letter With Your Offer Can Seal the Deal
The personal touch of a handwritten or typed letter of intent can truly make all the difference when submitting an offer for a home. Simply the act of taking the time to communicate directly with the sellers can draw them in and lend credibility to your offer. Ultimately, you are hoping to create an emotional connection between you and the home sellers so that when they compare yours against other offers they received, it will stand out above the rest. A personal letter can be just what they need to make their decision easier and select yours as the winning bid.
Ready To Make an Offer on Your Dream Home?
When you’re ready to make an offer on a home, remember to keep these four factors in mind. The price should be fair and in line with the home’s value, you should include a large down payment, your loan pre-approval shows that you’re financially ready to buy, and finally, include a personal letter. A well-formulated offer takes all of these factors into consideration and gives you the best chance of having your offer accepted.