In this difficult real estate market, it can be challenging to get your offer accepted. Here are three things buyers can do to submit the winning offer while minimizing risk:
1. Escalation clause. Adding this document to your purchase contract protects you if you get into a multiple-offer situation, so you aren’t bidding against yourself. For example, if the asking price is $300,000 and you’re willing to go up to $310,000, you may decide to bid the $300,000 but have an escalation clause that says you’ll pay $1,000 more than any other offer up to $310,000. So if someone offers $305,000, your offer becomes $306,000. That way, if someone bids $315,000, you put your best foot forward, even if you lost out on the home.
“Post-closing possessions are fairly common in the current market.”
2. Appraisal guarantee. This option is for those who have a little more liquid cash available. Let’s say your offer gets bid up to $310,000, and the seller wants some guarantees that you’ll truly close. You may not be certain the appraisal will come in at that price, but you really want that house, so you’ll offer a $10,000 appraisal guarantee. That means if the appraisal comes in at $300,000, you’ll still buy the house because it’s within the amount of your appraisal guarantee. This is a way for the buyer and seller to work together in an appreciating market.
3. Know what the seller wants. Your buyer’s agent should be calling the listing agent and asking when they want to close, what terms they want, whether earnest money is crucial to them, and do they need a post-closing possession? These things likely won’t cost you any money but help the seller feel better about your offer. Post-closing possessions are fairly common in the current market, so you can become a short-term landlord, and it helps the seller with their transition. If they want more earnest money, it’s money you would be spending toward the transaction anyway but helps them feel more secure.
If you have further questions about writing winning offers or any other real estate matter, call or email me. If there’s a topic you’d like to learn about, please shoot me a message; I’d be glad to make a video about it. I look forward to speaking with you soon.
