The housing market is still hot, with prices rising and interest rates still near historic lows. Many first-time buyers are unable to buy homes due to low inventory causing bidding wars that are pricing them out of the market. However, you don’t have to overpay to make a strong offer on your dream home. Read on to learn five techniques to make an offer that sellers will think twice about refusing so you can buy your home on your budget.
Merely thinking that you can get a mortgage loan versus having a pre-approval letter from a lender saying that you can are two very different things in the eyes of a home seller. Before you even start looking at homes, you should speak with a lender to learn what kind of loan you might be approved for. A pre-approval letter from a lender, when submitted along with your offer on the home, shows that a lender has checked your financial situation and has agreed to lend to you. Be careful that you don’t confuse this with a prequalified letter, which is essentially the same as “thinking” you might be able to get a mortgage loan. If the sellers’ decision comes down to your offer with a pre-approval letter and an identical offer without one, they are most likely to accept yours.
Offer more earnest money
Earnest money is a small deposit that you make on the home when you submit your purchase offer. It shows the seller that you are a serious buyer, and a higher-than-normal amount might make your offer stand out over similar offers with a smaller deposit. If your offer doesn’t get chosen, you get that money back, and if they do choose your offer, that earnest money is applied toward the cost of purchasing the home.
Put your best offer forward
Many sellers want to sell their home as quickly as possible with the least amount of negotiation involved. That means that sellers prefer not to haggle and negotiate on the sale price of their home, and they will most likely have their choice of multiple offers on the table. Instead of providing a low-ball offer hoping to negotiate further, put your best offer forward from the get-go. Hoping for healthy negotiation may cause you to lose the property to another buyer, or may escalate a bidding war on the home.
Be flexible with your schedule
Imagine all the time it takes for you to buy a home, and then imagine selling one while trying to buy a new one at the same time. That’s what this process might be like for the seller you are trying to woo. Whether the seller wants to move ASAP into a new home they have already purchased or is hoping for a little bit more time to get affairs in order before the move, offering flexibility with your timeline might help make your offer stand out.
Personalize your offer
When you buy a home, you aren’t just buying a structure. In truth, you’re buying the home where the seller likely made many memories. Sellers like to think that the new owners will love and care for the home as much as they did, and may respond favorably to a personal touch with your offer. Consider writing a short letter to the seller explaining what you love about the home and how you will use each part of it. While it might not put your offer at the very top if there are other, stronger offers on the table, it might give your offer an edge over similar offers.
Buying a home you can afford doesn’t have to be complicated. Learn more about affordable mortgage products from the NC Housing Finance Agency and access educational materials that can help you learn what you need to know about home buying at www.nchfa.com/home-buyers.