Navigating the home-buying process can be difficult in the best of times, but it can be especially stressful when you’ve planned and saved, only to see your favorite homes snatched up before you can even make an offer.
In the current landscape, there simply are more buyers than sellers, and homes are moving quickly — sometimes for more than the asking price due to high demand and market velocity.
If you’re able to make an all-cash offer, you’ve got an edge. But there are other winning strategies built on empathy, persistence, creativity and flexibility that also can get you over the threshold if you’re buying with a mortgage.
To improve your chances of having an offer accepted in a competitive buyers market, you may need to act fast and think creatively. Here are seven ways you can prepare.
Get pre-approved for a mortgage
Buyers who are organized, well-prepared and ready to move when the right home comes along are in a better position to get the house of their dreams. What does this mean? Determine if there are any issues with your credit report, and make sure there are no outstanding bills or unpaid debts that can negatively affect your credit score.
If your finances are sound, start by getting a pre-approval letter from a reputable lender that you can show to agents and sellers. A pre-approval letter is typically good for 90 days and shows sellers that you are a motivated, credit-worthy buyer who is able to act fast.
In a competitive market, sellers will likely have multiple offers to choose from and will look for a buyer who is able to close on the sale. The price on the offer is a huge factor, but the terms and conditions you offer — including the ability to close quickly or be flexible around the closing date — can be as important. Showing that you can pay for the home puts you on equal footing with other buyers and allows your offer to stand out in other ways.
Make a ‘clean’ offer
The most compelling offers are flexible enough to meet the seller’s needs. For example, offer a quicker escrow for a seller who needs one or give them more time if they’re still hunting for a new home themselves. You also can close quickly and allow them to rent back the home for a specific period, but be sure to do your research on the pros and cons of this arrangement first.
When scheduling inspections, try to get an appointment soon after your offer is accepted, or schedule a pre-inspection before you submit an offer. That way, you can remove your inspection contingency more quickly if you’re comfortable with its findings.
Ask your lender to pre-schedule an appraisal when you make the offer, or at least check when an appraisal will be available to assure the seller of the timing. No seller wants to accept an offer that falls through two or three weeks later if the home’s value in the appraisal is lower than the asking price. Swift timetables help ensure that your needs are met while assuring the seller that the sale will go smoothly.
Use remote tools to stay a step ahead
In a strong market, it’s not only common for a home to receive multiple offers before the first open house, but possible for a home to go from listed to pending in under a week. In April 2021, 47% of U.S. homes were on the market for less than a week before going pending, which is why waiting to see a home in person could mean losing out on the opportunity to buy it.
Explore homes ahead of time through virtual tours so you can focus on the homes you’re most interested in and move fast on a home you love. Remote home tours can be done on your smartphone — and some agents even make live walkthroughs available through video chat.
If you’re ready to act, do so as quickly as you can. Some sellers set a deadline for reviewing offers, but there’s no reason you can’t submit earlier and every reason you should if you have a strong offer.
Work with an experienced local agent
An experienced agent who understands the local market can mean the difference between getting your offer accepted quickly or spending months unsuccessfully writing offers. Want to live in a particular neighborhood? Chances are there are a handful of agents who specialize in the area. Learn who they are, and try to work with one of them.
A good listing agent who is looking after their client’s interest wants to be as certain as possible that a deal will go through to closing. One way to provide this certainty is to steer their client toward a buyer whose agent is well-known, respected and can get the deal done.
Present yourself in the best possible light
Your offer should look professional. Ideally, it should be typed with a pre-approval letter from your bank or broker attached to the offer. If there are disclosures presented to you prior to your making an offer, sign off on them. Make it clear to the seller that you’re serious, motivated and ready to move ahead should they choose to work with you.
Plan ahead for a bidding war
Your best strategy for competing in a hot market is to prepare a plan that allows you to act quickly. For some buyers, that means including an escalation clause that signals to a seller that you’re willing to put in a better offer should a competitor top your original bid. If you decide to include such a clause, be mindful that a home already priced at the high end of your budget could push you to pay more than you intended.
When you’re competing against cash buyers for a home you love and plan on staying in for a long time, consider whether to offer more than the asking price. Cash buyers are counting on a seller’s desire for a sure sale that won’t fall through because of financing issues, and they sometimes expect a discount for what amounts to a guaranteed sale. Doing the math can help you determine whether you can bump up your offer and how doing so would affect your monthly payment.
Know your bottom line — and prepare to make trade-offs
Staying within budget in a competitive market can be a test of will, especially when you need to act fast. To avoid paying more than you can afford for a house that seems to check all of the boxes, review your must-have list ahead of time and identify what is non-negotiable and where you’re willing to be flexible. Remember to factor any home improvement needs into your budget, and figure out what can’t wait and what projects you can save for down the road.