It can be cutthroat out there when you try to purchase a house. With more buyers out there than sellers, you will likely find yourself in a bidding war with many other hungry homebuyers. How do you make your home purchase bid stand out above the others? Here are a few simple, easy-to-implement tips.
Get Preapproved Before a Home Purchase Bid
The easiest way to stand apart from other buyers is to get preapproved. As a matter of fact, many sellers will not even entertain the thought of wasting their time with people that want to see the home that do not have a preapproval. Take the time to find a lender and secure that preapproval letter so that you can prove the seller that you are serious about finding a home. Without that letter, you could just be a nosy neighbor that the seller does not know, which means you are wasting the seller’s time.
A preapproval letter also helps the seller see that you have the capability of securing financing if they were to accept your bid. Typically, housing contracts have a financing contingency on them, but if you have a preapproval letter, that contingency is not as big of a deal to the seller as it would for someone that was not already preapproved.
Close when the Seller Wants to Close
The typical closing time after signing a housing contract is between 30 and 60 days, but sometimes sellers have extenuating circumstances. If your timing is flexible because you either do not own another property or you have the ability to secure financing with or without the existing property, you can have the edge on the competition. Getting to know the seller and their reason for moving can help you become more attractive to them. For example, if you know that the seller is motivated to move because of a job change and needs to move in under 30 days, you can let him know that you are flexible with your timeframe. If you can meet the seller’s timeframe, that might be more important to him than the amount of money he gets for the home.
Tighten the Inspection Contingency
It is very common to have an inspection contingency on the housing contract because no one wants to purchase a home that has serious issues. However, you can tighten up the timeframe that you tie the seller up in a contract that might or might not go through. Rather than asking for the typical 15 day grace period to secure the inspection, tighten the timeframe up as much as you can. The best way to do this is to create a relationship with an inspector ahead of time, this way when you find a home you want, you can secure his services right away. Even decreasing that typical 15-day contingency to 5 days can be the reason you get picked to purchase the home.
Put an Escalation Offer on the Bid
If you know there are other bidders on the home you wish to purchase, you can add an escalation bid to the offer you submit. This bid lets the seller know that you are willing to increase your bid “x” number of dollars if someone outbids you. If the seller knows that you are willing to increase your bid and they prefer your family over another to purchase their home, you have a higher chance of winning the bid. This is a way to protect yourself from being outbid without realizing it and having the seller naturally deny your bid and take the higher one. It basically gives the seller more to consider with your bid.
Lower your Housing Contingency
You should never make a bid on a home without some type of housing contingency, but if you tie the seller up for say, 60 days, and then the financing falls through, it could be bad for the seller. If you do your homework ahead of time and get the preapproval and necessary information you need, though, you can decrease the length of time on the housing contingency. The shorter the contingency, the more attractive your home purchase bid is to the seller.
Write a Letter
Nothing is more endearing to a seller than a receiving a heartfelt letter stating the reasons you want to purchase the home. Sometimes these letters even cause the seller to choose a lower bid just because they feel a connection to the person writing the letter. Be as heartfelt as you can in the letter, naming the reasons you want the home and how it would make a difference in your life. Remember, the seller is giving up a piece of their life and moving on, so there are many emotions involved in the transaction. You never know what that letter will be just what he needed to make a decision.
Making your home purchase bid stand out is not as complicated as it seems. You just have to take the time to do your homework ahead of time and to find out what you can about the seller’s situation. This gives you the leg up on the competition and enables you to make your bid the most attractive out of anyone else’s bid.
Justin McHood is America's Mortgage Commentator and has been providing expert mortgage analysis for over 10 years.
