Is a new home on your mind for the new year? If you’re thinking about buying, you’re probably wondering if there are ways to boost your chances of having your offer accepted. The Denver metro real estate market will likely stay very competitive, so it’s more important than ever to put your best foot forward on your offer. As always, working with a knowledgeable real estate agent is a crucial piece of the puzzle too, as your agent can identify ways to make your offer truly stand out.
When working with me, sellers are prepared! We will make sure the home is priced right, it shows like a model home, and we will boost all marketing efforts. When sellers get these things right, they can expect multiple offers in the first week or two, which makes it even more important as a buyer to put together the strongest possible offer.
Get pre-approved for a mortgage
Sellers today have high expectations, so most sellers and their agents won’t even consider an offer without a mortgage pre-approval. In my experience, people want to work with a lender who knows the area and has a high-level reputation. While it can be easy to get a pre-qual from just about anyone, it might not be the most beneficial in the long run. Pick a lender that understands your area, doesn’t tag on unexpected junk fees, and has a strong reputation.
Buyers who come to the table with a pre-approval are much more likely to get their offer accepted because the sellers know pre-approved buyers are serious. While it’s exciting to get out and home shop, browse online, and check out open houses, you should start the process with a pre-approval. You don’t want to find your dream home only to lose out on it because another buyer was already approved for their mortgage. This can also help speed the process up, which is necessary for a hot real estate market.
Getting pre-approved also benefits you because you’ll have a clear picture of how much house you can afford. It’s a great opportunity to look at your finances and identify a long-term housing budget that’s going to work for you.
What is a pre-qualification vs. a pre-approval?
Many people think of a pre-qualification as a pre-approval, but they aren’t the same thing. A pre-qualification is a preliminary estimate of what the buyer might be able to afford based on information the borrower provides, along with a credit check. A pre-approval is a more rigorous process, and this lets the sellers know that the buyer is serious. With a pre-approval, the lender reviews financial information, performs a credit check, and decides what loan amount the buyer is approved for.
Bring a strong down payment and good mortgage terms to the table
You have lots of options when it comes to your down payment amount, and you have to choose the amount that works best for your financial situation. However, the larger your down payment, the stronger your offer will look to sellers.
If you are able to qualify for a conventional loan, that can increase your chances of having your offer selected. Conventional loans typically have quick loan processing, reduce private mortgage insurance options, and more flexibility. Although many people think you have to have 20% down for a conventional loan, you may be able to put down as little as 3% (depending on your specific circumstances). Curious about conventional loans? Check out what Dave Ramsey has to say.
Make your offer as simple as possible and include an “as-is” provision
Your real estate agent can help guide you on your specific situation, but limiting the number of contingencies, concessions, and other requests can help your offer beat all the others. With low inventory, sellers hold a lot of power, so you want to make your offer appealing and easy. There may be things that come up during the inspection that need to be addressed, but try to limit your other requests.
Including an “as-is” provision means that you aren’t going to nickel and dime the sellers to fix minor things. You can specify that you’ll only request repairs to major defects (like issues with the sewer or roof).
Add an escalation clause
Multiple offer situations are very common in today’s tight real estate market, so adding an escalation clause can help you win the deal. An escalation clause essentially states that you are willing to go up if the seller receives offers that are higher than yours. You can clarify a cap price or leave it open-ended. Just carefully consider your top price and ensure it still fits within your budget.
Consider covering an appraisal gap
In the event that the appraisal comes in low, you could offer to cover the difference. If you love the property and are comfortable with the idea of paying more than the appraised value, putting that in the contract is a very big way to help your offer make it to the top of the pile. With the rate of appreciation in our recent years, you may be able to make that up after closing very quickly!
Offer the sellers a rent-back option
If the sellers need to turn around and buy a new home for themselves, they may need additional time in the home to avoid having to put down a contingent offer or a double move. You can rent the property back to the sellers for a set amount of time to help their next transaction go more smoothly. You do have the option of charging rent during this time, but your offer will look much more appealing if you are willing to keep the rent very low (or even rent it back for free).
Stay flexible when deciding your closing date
One of the most important parts of the real estate transaction is the closing date. Try to stay flexible to accommodate the seller’s desired date. You could make their life a whole lot easier, and end up with your dream house too (it’s a win-win!). The closing date can make or break the deal in many cases, so just keep in mind that allowing the sellers some flexibility can make all the difference when they decide which offer to take.
This is a good general rule throughout the transaction, too. Be accommodating and reasonable when scheduling things like the inspection and the appraisal, because maintaining a friendly and flexible attitude throughout the process can help things go more smoothly.
If you’d like to have a conversation about how to set yourself up for home buying success, reach out to me today! We can discuss your home goals and how I can support you on your journey.