03/02/2022
LONG post that's worth your time. Promise!
I'm working with more buyer clients right now than ever before, which leads me to believe there are quite a few reading this who are in the buyer boat as well. Since I (truly!) care more about you being able to buy a house PERIOD than buying a house through ME, I figured it would be a good idea to share the most sure-fire tactics I've been using to successfully secure homes for my clients over the last several months. Feel free to share with your friends (or your realtor!) if you think any of this would be helpful to them. Ok, here goes. 😊
1. Shop below your budget! 💵
This is the #1 piece of advice I'm giving clients right now as they begin their search. If you are pre-approved for 300k, you need to be looking in the 275k range or below. Almost every house is selling in multiple offers, and you'll need that 25k margin if you want to be competitive when the price inevitably escalates. List price is the starting number-- the floor. Everything goes up from there.
2. Use an escalation clause. 📈
If you aren't familiar, an escalation clause says you're willing to go a certain amount above the next highest offer up to your max price. Using this clause (hopefully) helps you stay ahead of the game without spending money needlessly. One thing I recommend that quite a few buyers fail to do when I'm representing sellers: offer a significant amount-- at least $2,000 --above the next highest offer. You can offer $50 over and end up with the highest number, but if the lesser offer has more attractive terms than yours, every seller is going to choose better terms over the opportunity to pocket a measly $50. And $2,000 over is only going to add about $10-12 to your mortgage payment, so no harm no foul in the long run.
3. Consider waiving the home inspection. 🧐
I know this sounds crazy, and objectively, it is. Who would ever make such an investment without a comprehensive understanding of exactly what you’re purchasing? I get it, and as an advisor looking out for your best interest 100% of the time, it’s difficult for me to recommend. However, I will say with complete certainty that the decision to waive the home inspection has been the tipping point for MANY of my successful buyers over the last year or so, as fear of the unknown is the biggest source of anxiety for anyone selling their house. At the very least, it’s a tactic worth keeping in your back pocket until the time comes. And if the house is newer or impeccably maintained with a recent roof and/or HVAC replacement, now might be the time to think about adding it to your offer arsenal.
4. Give sellers plenty of time to turn over the keys. ⏳
If you’re in a flexible lease or don’t have to sell your house in order to buy (ditch that contingency any way you can, by the way), ask your realtor to see if the sellers need time to transition to their next home. It’s quite possible they’re listing their place without even knowing when or where they’re going, and anything you can do to help ease that stress will go a LONG way toward making your offer stand out. Better yet, offer to let them continue living in their house *free* of charge for some or all of this time period. Your first mortgage payment isn’t due until two months after you close, so you have the flexibility to pass the savings along to them while giving them lots of room to breathe.
5. Shell out some cash to cover an appraisal gap. 💰
Next to inspection concerns, sellers are most worried their house might not appraise for the price you’ve offered them. The best way to calm those fears? Let them know up front that you’ll pay some or all of the difference between the appraised value and sale price out of pocket. You won’t end up having to spend that money if the house appraises at or above the sale price, but your willingness to do so WILL increase your chances at purchasing that home.
6. Increase your escrow deposit and make it nonreturnable. 🚫
What’s an escrow deposit? It’s an amount of money deposited along with your offer to show the seller you’ve got some skin in the game and are a serious buyer. The deposit comes back to you at the end of the deal to be applied toward your final costs at closing. Want to let them know you’re even more serious about seeing everything through? Increase your escrow to at least 1% of the purchase price and make it nonreturnable to you after a certain point in the transaction. You’ll still get it back at the end when all goes well, but telling the seller you’re willing to give it up if something goes awry shows them you’re sure things will go seamlessly as planned.
7. Have your agent send an intro video with your offer. 🎥
This last technique is admittedly unorthodox, but almost no one else is doing it and it’s a very easy way to stand out from the pack and give sellers peace of mind. I’ve recorded one for every offer I’ve submitted since the beginning of 2021 and I’ve been told by multiple listing agents and sellers directly that it was the thing that pushed us over the top. A short intro video serves four purposes: a sincere thank-you for considering our offer, an important opportunity to put a face to the name on the contract, a bullet-pointed breakdown of our offer terms, and a guarantee that we have all our ducks in a row and have vetted everyone (inspectors, lender, title company, etc) who will be professionally handling every aspect of the transaction. Short and sweet, and incredibly effective!
I really hope all this information is beneficial to you and helps empower you to purchase the home of your dreams when the time comes! If you're on the hunt now and aren't working with an agent, I would LOVE to answer your questions and/or discuss all of this further with you anytime you'd like: 859.270.0702. At the very least, be encouraged that this market is winnable with techniques like these! Happy house hunting! ❤️🏡
