How to Make an Winning Offer on a House
Making an offer on a home isn’t something any of us does on a regular basis, so there are bound to be questions and maybe even a little anxiety. After all, buying a home is one of the biggest financial investments you’ll ever make! With real estate still being a seller’s market in Portland, you may feel like the cards are stacked against you as a buyer.
There are steps you can take, though, to give yourself as much control as possible when presenting an offer on a home. In this article, we’re sharing our best tips to help you navigate the process of making a winning home offer and increasing the chances of getting the home you want.
Offer to Pay with Cash
Okay, we know that most people can’t buy a home outright. In fact, in most cases, real estate cash purchases are done by investors, not families or single home buyers. But it’s worth a mention because money talks, and a seller may be more likely to take an offer that’s under the asking price if they know it’s going to be a cash sale. Buying with cash also removes the whole financing piece of the transaction and speeds up the sale.
If Not, Have Your Pre-Approval Letter in Hand
Before you start house hunting in earnest, it’s helpful to take the time to get a pre-approval letter from your lending institution. While this won’t be a guarantee that you’ll be approved for a particular home you have in mind, it’s a great way to know your price parameters. It also lets the seller know you’re serious and prepared. Getting a pre-approval letter can take anywhere from 1-3 days, a small amount of time on a step that will only work in your favor. Before you start this process, talk with your real estate agent. We have excellent recommendations on lenders that we’ve literally used hundreds of times, lenders we know will make the process as easy for you as possible. Rates are important, but they are not everything. As an experienced agent (licensed since 2003) I’ve seen plenty of lenders fail to finance a purchase, either because they didn’t close on time or due to a paperwork or accounting error, leaving the buyer in a terrible spot.
Sweeten the Deal, Carefully
Ask First. Have your buyers agent ask what the seller would like to see in an offer BEFORE the offer is written up. Perhaps the seller is interested in a long or short closing date. Perhaps the seller is going to insist on selling the property as-is (this doesn’t mean you have to waive your inspection period). Perhaps the seller wants to exclude certain personal property items from the sale – the list goes on. The best thing to do is ask first, then write up the offer.
Don’t panic. It isn’t uncommon for a seller to make a counter offer. If this happens, don’t panic. Sometimes counter offers are for a higher dollar amount, and sometimes they’re about closing dates, contingencies, and inclusions and exclusions. They can also be a combination of any of the above. Go in with an open mind and be willing to budge on some of your initial requests. Also, respond FAST, in a hot sellers market the seller can rescind (pull back) their counter offer anytime prior to your acceptance or buyer counter back.
Do not waive the home inspection. Never waive a home inspection. The last thing you want is to find yourself legally attached to a sale on a property with major issues or an appraisal value far beneath what you’re offering. Read more more about alternatives to waiving a home inspection.
Do not waive the appraisal contingency. We also recommend never waiving the appraisal contingency, or at least putting a cap on the amount you’re willing to contribute in cash. Never, ever write a blank check. Let’s say you agree to pay 600,000 for a home and waive the appraisal contingency but only have 20,000 in extra cash lying around. The home then appraises (because you have to get an appraisal to get a loan in nearly every circumstance) at a mere 550,000. Now you are in breach of a legal contract and potentially in serious hot water (the seller could sue you and win). Put a cap on the amount you’d be willing to cover in an appraisal gap (difference between your offer price and what the bank is willing to lend you). To learn more, read our appraisal FAQ here.
Do not use an escalation clause unless you’re willing to pay top dollar. Many sellers will see the top amount you’re willing to pay and simply counter your offer back at that high, high amount. Escalation clauses tip your hand and let the seller know how much you’re willing to pay. It isn’t the best negotiation strategy, though in a highly contested multiple offer situation, we do occasionally write them up for our clients. What is an escalation clause? Summarized it is saying this lower price X is my offer, but if you can prove to me there are higher offers, I’ll pay $1,000 more than their offer up to a max of X.
Talk to your agent
Be sure you have an experienced, well-informed real estate agent helping you with your search and purchase. A good agent will know how local lending institutions operate. They’ll also be able to guide you in your overall offer, based on their years of experience. Our team’s buyers agent has been licensed since 2004 and has negotiated hundreds of successful offers for happy clients.
When we work with clients, we want to know exactly what they want and need in a home. We also want them to be as specific as possible about their finances. This information helps us put together the best initial offer possible and act fast if a counteroffer is needed.
Be Aware of the Real Estate Market
The real estate market shifts and changes often. We’ve especially seen this over the past couple of years, due to the COVID-19 pandemic. Do what you can to educate yourself on the current market, no matter when you start shopping around.
One way to stay on top of all Portland’s real estate news is subscribe to our blog, a top 100 real estate blog in the world, and focused solely on the greater Portland metro. If you can pick the time you buy, then read our month by month breakdown of the best time of the year to purchase a home.
It’s easy to get discouraged while house hunting, especially when the market is competitive. But don’t lose heart! It’s possible to find what you’re looking for, especially when you work with a knowledgeable, experienced real estate agent. Things can change fast—even overnight—and you might wake up to find that your dream home just went on the market. When this happens, it’s good to know what you need to make the process go as smoothly as possible.
Need a Knowledgeable, Experienced Real Estate Agent?
Over small team in Oregon and Washington has completed over 2,000 home sales. Contact us today and let us know where you are looking to buy or sell. We’re ready to help! Give our main line a call and we’ll direct you to the right agent asap. 503-714-1111December 24, 2021