No doubt about it, the spring market started early this year! In many ways, the spring market has been going on for several years now. Many buyers have to compete in multiple offer situations to get the house they are wanting to buy. People assume that sellers will simply choose the highest price, however, we have sometimes seen that sellers are willing to accept an offer for less money that has better terms. If you are a buyer and your dream house is already at the top of your budget, do not fear! We might just have a few tricks up our sleeve to get the job done! First, we need to start off with what is important to a seller and what could go wrong in a transaction. Here are a few ways we can increase the VALUE of our offer without necessarily increasing the PRICE. Please note that while these are great tools, your trusted real estate agent will help guide you on which tool is appropriate to use for you and your specific situation.
Seller has a strict timeline of when they need to close, but may need some time to move their stuff out of their old place and into their new place.
Consider if the seller will want to rent the house back from you for a couple of days after closing. This will allow the seller the funds they need from the sale of their house and give them a couple of days to pack up their belongings and move out.
You are in a multiple offer situation and you are willing to go a significant amount over asking, but you don’t want to overpay for the property.
Consider an Escalation Clause. An Escalation Clause essentially enables you to do an “eBay-Style” bidding. You will put in a specific purchase price in your offer, but then say you are willing to go up to a higher purchase price if the sellers receive an offer close to that price. For example, if a house is listed for $250,000 but you are willing to pay up to $275,000, you might use an escalation clause stating you will pay $2,000 over the highest offer received up to a maximum of $275,000. Of course, the seller must prove that they did receive another offer that proves the escalation.
Since houses are selling significantly over asking price, the sellers are concerned that appraised value will come in under the purchase price. However, you are not comfortable with waiving the appraisal contingency.
Consider adding language to your offer stating you will pay a certain amount over the appraised value if the value comes in below the purchase price. For example, you can write in the offer that you will pay $5,000 over the appraised value if the value comes in low.
You want to have an inspection contingency but may be competing with offers that are willing to waive the inspection contingency.
Considering adding language stating that you won’t ask for repairs nor cancel the deal unless the total cost of repairs exceeds a certain dollar amount. This will allow you the peace of mind of having a licensed inspector inspect the property and if there are major defects you have the ability to potentially cancel the deal or negotiate the seller to make the repairs. This also provides the seller with the comfort of knowing you won’t be “nit-picky” on minor defects.
It may be tough out there, but buying a home is not impossible. Get the right agent to walk you through your options (we of course would love to help you!), and get your game face on!