As you all know by now, we are in one of the hottest markets for home sellers that we have ever seen in the greater Puget Sound. Listing inventory is getting tighter and tighter, homes are selling faster and faster, and with more offers.
So, what’s a buyer to do then? Just not purchase? Perhaps that is what you ultimately decide to do, but before you choose the nuclear option, consider implementing some of these tricks and tips to get your offers accepted.
Perhaps the best piece of advice I can give you is, when it comes to negotiating in general, figure out exactly what the other side wants out of the negotiation and if possible GIVE IT TO THEM. Simply ask your counterpart what is their desired outcome. Do they want a certain price, certain closing date or other terms? If you are able to give them what they want, while still getting what you want, you are much more likely to strike a deal. The law of reciprocity is real.
(Important note – Each situation, each player in the transaction, and each house is uniquely different…please consider your objectives and risk tolerance before implementing these suggestions!)
1 – Waive your financing contingency. If you have stable employment, consider waiving your financing contingency. Especially if you have dual income, low DTI, a solid emergency fund, and you know that your career skills are very marketable.
2 – Waive your inspection contingency (or conduct a pre-inspection). Perhaps one of the riskiest options, but an effective one. Sellers LOVE not having to deal with the uncertainty that an inspection brings, along with the re-negotiation. This uncertainty though, is the exact reason why it’s risky for the buyer. If you are living paycheck to paycheck and the prospect of your hot water tank exploding 2 weeks after buying your house would crush your soul…this option is probably not for you. If you are pretty handy, the home appears to be in great shape and is generally new, and your financial well being won’t be impacted by a few repairs here and there…perhaps this is a good option for you.
3 – Make your earnest money a non refundable deposit. I’m not particularly a fan of this option, but it can be helpful when necessary. Note – this option is full of potential traps.
4 – Offer an ‘appraisal guarantee’. Basically, you are saying that if the appraisal comes in lower than the agreed upon purchase price, you will cover the difference up to a certain amount. This generally makes sense if you are offering an amount higher than the list price.
5 – Adjust your timeline to fit the Seller’s needs exactly. Assuming you have the flexibility to do so, ask the Seller if they want to close on this date or that date, if they need or want a rent back. This can be a very helpful aide to getting your offer accepted, and if it doesn’t impact you negatively, why not!
6 – Make ‘backup offers’. If you don’t win on the initial round of negotiating, don’t give up quite yet! Consider asking the listing agent if the seller would be open to accepting your offer in a ‘backup’ position. If the first deal falls apart, you’re now the buyer in first position! Some sellers and agents don’t like backup offers simply because more work is involved, but it can be a great tool.
7 – Look at homes that have been on the market for longer than the local CDOM Average (Cumulative Days on Market). In other words, if homes are selling on average in 5 days, perhaps focus your search to homes that have been on the market for at least 7-10 days. This can aid in lowering the competition. Perhaps these homes were just poorly marketed, or have some simple flaw that can be overcome…like needing new carpet and paint.
8 – Use an escalation clause wisely. Say you are willing to pay up to $450,000 for a house, but only if they have other competing offers. Otherwise, you’re only willing to pay $430,000. That’s essentially what an escalation clause allows you to accomplish. Like our other advice here, it’s really situationally dependent if this makes sense or not, and some agents and sellers will frown on escalations because if they don’t get the competing offers, then they are selling for less than what the buyer is actually willing to pay.
9 – Purchase a 1 year home warranty. This will aid with a lot of the ‘murphy’s law’ items that come up in the first year, and will mitigate the lack of inspection to some degree.
10 – Keep your earnest money to a ‘stomach-able’ amount. Ultimately this is the amount of money you are ‘risking’ in the deal. If you waive a bunch of your contingencies and otherwise give away the farm…If you change your mind before closing, this is the amount of money you will loose if you have no contractual reason to back out. (Assuming you have not written custom language into the contract making this a non refundable deposit, or have selected ‘sellers election of remedies’ on the Form 21 instead of ‘forfeiture of earnest money’.
This is certainly not an exhaustive list of everything you can do to increase the odds of getting your offer accepted, but it’s a great start! One thing I’m certain of, you must be keenly aware of who is in the drivers seat when making an offer. If the Listing Agent and the Seller know they are driving the bus, you must figure out what accommodations you are willing to make to get the deal done.
Good luck and happy hunting!