In San Diego’s real estate market today, seller’s are receiving multiple offers on their homes, creating bidding wars for buyers. This is what you would call a seller’s market, a market where the amount of buyers is greater than the amount of sellers. Due to the amount of demand on homes, buyers are facing more competition and homes are selling above list price. These days you need to have your offer stand out from the rest. Here are a few ways to make your offer more attractive:
Make a Competitive Offer
In a seller’s market, you need to make a competitive offer. There’s too much competition for you to low ball and hope they’ll negotiate. Make your best offer upfront.
Increase your Earnest Deposit
Your earnest deposit is a deposit made to the seller showing your good faith to the seller. Basically it’s money the seller keeps if you decide to cancel after all contingencies are signed off. Normally buyer’s have a deposit of 1-2% of the purchase price. To show the seller you really love the property, you should increase it to 3%.
Waive your Contingencies
Contingencies are set in place to protect the buyer. The buyer can cancel the purchase of the home if it doesn’t meet the contingencies set in contract. There are three main contingencies: Inspection, Appraisal, Financing. An inspection contingency allows the buyer to conduct a home inspection and cancel the purchase if needed, based on the home inspection findings. The appraisal contingency allows the buyer to cancel the purchase if the appraisal comes in lower than the offer price. The financing inspection allows the buyer to walk away if the buyer cannot get approved for the loan.
To be more competitive, you have the option to waive any of these contingencies. I’d only recommend doing so if you are 100% sure on your finances and willing to deal with anything that comes up on the home inspection.
Shorten your Escrow Closing Period
The normal amount of time from when the offer is accepted to when the home transfers to the buyer is 30 days. Your offer will be more attractive if you reduce this time. Before doing so, talk to your lender and ensure that they can get a loan approval faster than 30 days.
Write a Letter to the Seller
Although the offer amount is very important, so is getting to know your buyers. Sometimes writing a short letter to the seller about yourself can tip the odds in your favor if all offers are in the same range.
Cash is still king. Paying cash removes both appraisal and financing contingencies. The bottleneck of escrow closing periods is financing. So on top of being able to remove the appraisal and financing contingency, you’ll be able to shorten your escrow closing period significantly.
If you have any questions, feel free to contact me or leave a comment below.