The Secrets to Winning an Offer in a Sellers’ Market
You know you’re in a tough position to purchase a home when there are more active buyers than the number of the available inventory in your market. This is what we call in the world of real estate a sellers’ market when property prices increase relative to the high demand for available properties.
When the local economic climate experiences positive fundamentals (that is, there’s an increase in available jobs and wages, among others), people are encouraged to move in and make investments. The demand for real estate rises and triggers aggressive competition among buyers which mostly ends up in a bidding war.
In a sellers’ market, buyers have little room to negotiate better deals. This benefits sellers who can set very high rates and, in effect, attract bids that might go beyond actual asking prices. Under such conditions, you will have to outbid other buyers who might respond by upping the ante.
Then again, price isn’t the only factor for winning a good deal in a sellers’ market. Let us fill you in on a few insider secrets to writing a surefire purchase no matter how aggressive the competition gets.
1. Go all-in with all cash
This strategy won’t work with anyone unless you have enough cash in the bank to close the deal right then and there. Sellers are more likely to accept your offer if they know you can purchase in cold cash, which bypasses the tedious process of applying for a mortgage. This saves time, which is what many sellers want.
2. Guarantee a closed deal within a month
Many sellers want the transaction to happen quickly, which explains why they are more interested in all-cash offers. So, assuring that a home purchase will be completed in less than a month can convince a seller to accept a deal. However, this could mean shortening certain processes along the way, thereby increasing the risks on your side of the negotiating table
3. Set a high earnest money offer
If you aren’t willing to buy in all cash, you can at least offer a higher deposit. Earnest money is a great way to grab the interest of sellers. You just have to set a safe amount that effectively reels in sellers. It’s always a good idea to secure a deposit of 1% to 2% under ideal market conditions. In a sellers’ market, however, you will need to go higher, usually at a minimum of 5% to really stir up interest.
4. Consider a contingency removal
In any real estate transaction, buyers have three types of contingencies that grant them protection if ever a deal takes a wrong turn. There are contingencies for inspections, appraisals, and loans. These could be waived to the advantage of the sellers. Doing so, however, comes with serious risks. You will need to consult with an attorney and your realtor to come up with a better strategy.
5. Look for a competent real estate professional
When it comes to representing your interests in a sellers’ market, an experienced realtor will make all the difference. You need to search for someone doesn’t only explain the purchase process. You will have to hire someone who’s experienced enough to get you that deal.
Sure enough, Arbrook Realty is exactly the type of partner you need to find a workable deal within the DFW area. Give us a call today so we can give you a low down on current market conditions and provide you with the much-needed guidance to get you the deals you wanted.