It's October and temperatures are finally starting to cool down, but the real estate market is still red-hot, especially if you're a buyer. Most home buyers are going to be competing when a new home comes on the market because of the low inventory. So what are the things you can do to win in a multiple offer situation? Here are my 5 tips for home buyers for creating a competitive offer:
1. Escalation Clause
Include an escalation clause in your offer for the max price you're willing to pay. This allows you to offer a lower price, that will automatically increase to beat out other offers based on the total net to the seller. For example you could offer $300,000 with an escalation up to $310,000 in $1,000 increments. If there is another offer at $305,000, yours would automatically increase to $306,000.
2. Paying Sellers Taxes
Typically the transfer and recordation taxes are split evenly between the buyer and seller. Offering to pay the sellers portion will increase their net without increasing the purchase price. This is beneficial because it helps to reduce the risk of a property under appraising.
3. Non-refundable Deposit
Make part or all of your earnest money deposit non-refundable. This can be based on home inspections, financing or another contingency where a buyer might terminate. The seller typically doesn't get to keep the buyers EMD, so this gives them peace of mind that if the buyer terminates they will be compensated.
4. As-is with Right to Terminate
It's rare I would suggest a home buyer skip the home inspection. This option allows you to do all the inspections you want, but the expectation is you won't be asking the seller to make a bunch of repairs. You still have the option to terminate the contract if the repairs needed are too extensive, and occasionally you can still get the seller to make some repairs.
5. Flexibility with Settlement
Appealing to the sellers timeline is a great non-monetary way to make your offer more attractive. If they need to close quickly, or prefer a longer settlement with rent back, your flexibility could beat out another buyer who has a specific timeline. Communication with the listing agent to find out this information is critical before writing your offer.