Purchasing a property in a seller’s market means that your offer is likely to be just one of multiple offers that the seller is choosing from. What can you do to get ahead of the competition, without paying top dollar?
Cash on the Table
If your financial situation allows, an all cash offer is generally most appealing to the sellers. By avoiding financing contingencies, the seller is assured that the money is there, and that the transaction can close quickly and smoothly. When faced with competing offers, cash in hand sooner may outweigh a higher financed offer. If this is not possible, you may consider making a larger earnest money deposit to signal your serious intent.
Go Where Others Aren’t Looking
While the rural areas around most small cities is extremely competitive, there are more opportunities as you look for more remote and specialized properties. The market for comfortable family homes on acreage within 30 minutes of town is apt to be highly contested. If you are comfortable living in a more remote location, off-grid, or in a “unique” home, you’ll face a lower level of competition. However, even very the remote areas are off-grid properties that we work with are seeing similar challenges.
Bidding Strategy
If you know you will be making a competitive offer, it’s advantageous to lay out your strategy in writing ahead of time. This helps you to make a good decision, and minimizes the emotional involvement of a “bidding war.” Many competitive offers are written with a built-in escalation clause. This is a statement along the lines of, “We will match the best offer by $1000, up to a limit of $550,000.” This puts the bidding terms in place from the outset, and makes your limits clear to the seller.
Drop the Contingencies
Purchase contracts are typically written with numerous contingencies, under which the buyer can withdraw from the deal without any penalty. A buyer may opt to waive some of these contingencies from the outset, to help assure the seller of a smooth transaction. This should only be done advisedly, as a offer on a piece of property is a legal contract. Waiving the inspection or appraisal essentially means buying the property “as is.” So so advisedly, and with consideration of the ramifications if you do discover a major issue before or after the sale.
Flexible Timing
Many sellers are apprehensive about finding themselves caught between selling one home and being unable to find another. If your timing is flexible (if you are currently renting, for example), then making an offer that allows for a flexible closing date or for the seller to rent back for a period of time after the sale may be the deciding factor.
