5 Tips on How to Make a Competitive Offer

Home Buying MarkAnthony Ball January 24, 2024

In today's real estate market, there is significant buyer interest coupled with low housing inventory. With numerous buyers vying for a limited number of homes, understanding the intricacies of crafting a confident and competitive offer is crucial. Here are five key factors for success during this crucial stage of the homebuying process:

1. Listen to Your Real Estate Agent

When it comes to making an offer on a home in today's competitive market, the emotional aspect of the process for buyers highlights the importance of relying on trusted professionals to provide guidance and maintain focus on essential priorities. Remember to let your homebuying team guide you on your journey, not your emotions. Their support and expertise will keep you from compromising on your must-haves and future financial stability.

Your real estate professional is a crucial resource for addressing your questions and concerns as you prepare to make an offer.

2. Understand Your Finances

Having a thorough understanding of your budget and determining how much house you can afford is crucial. To achieve this, it's recommended to contact your lender and obtain pre-approval for a loan early in the homebuying process. Surprisingly, only 44% of current prospective homebuyers are planning to apply for pre-approval. Taking this step sets you apart from others in the market, demonstrating to sellers that you're a serious and qualified buyer. This can be advantageous, especially if you find yourself in a bidding war.

3. Be Ready to Move Quickly

The Realtors Confidence Index, a monthly publication by the National Association of Realtors (NAR), indicates that the average property currently for sale is receiving more than three offers and is spending only a few weeks on the market. These trends underscore the competitiveness of today's real estate market, emphasizing the need to remain flexible and attentive in your search. Once you identify a home that meets your requirements, it's crucial to collaborate with your agent and promptly submit an offer to increase your chances in this fast-paced environment.

4. Make a Fair Offer

While it's understandable to seek the best possible deal when purchasing a home, cautions against submitting an offer that is excessively low, as it may cause sellers to question the seriousness of your intent. It's crucial to strike a balance between a competitive offer and one that reflects the market value of the property. Relying on the expertise of your real estate agent during this phase will ensure that your offer is well-informed, considering factors such as the home's condition, recent sale prices in the area, and the overall market value. This approach helps you maintain a competitive edge in the negotiation process.

5. Be a Flexible Negotiator

Following the submission of your offer, the seller may respond by accepting, rejecting, or countering it with modifications. In a competitive market, it's crucial to remain flexible during the negotiation phase. Strengthening your position may involve including elements such as flexible move-in dates, a higher offer price, or minimal contingencies (conditions set by the buyer that the seller must meet for the purchase to proceed). However, there are certain contingencies that should not be overlooked. It is advised to be against waiving the inspection contingency, especially in a hot market or if the home is being sold "as-is," meaning the seller won't cover repair costs. Retaining the inspection contingency ensures you have the opportunity to assess the property's condition and avoid potential financial burdens associated with unforeseen repairs.

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