When inventory is super low like it is in parts of central Ohio and the demand for purchasing real estate is still on the rise due to low interest rates, empty nesters and an influx of millennials, How can you make your offer stand out above the rest? Here are a few tips:
- Never ask for closing costs to be paid for by the seller if you can afford to pay for them on your own.
The amount of closing costs requested to be paid for by the seller for a buyer is deducted from the seller’s net profit. Plus, it doesn’t look good for a buyer asking for extra funds to pay for your loan and all other fees involved. This may throw up a red flag to a seller and they might question what standing the Buyer is in financially if they need closing costs paid for especially when there is so much competition with other buyers due to the low supply of homes for sale.
- Use an escalation clause.
For example, offer to pay $1,000 higher than the next best offer with a cap. Of course you want to make sure your agent understands how this clause works. If Buyer (A) offers $201,000 on a home that is listed at $200,000 and puts an escalation clause in the contract showing they will pay $1,000 higher than the next best offer up to $207,000 or (CAP) with proof of the other offer that escalates the price and Buyer (B) offers a flat $204,000 than Buyer (A) will have the highest and best offer with an agreed upon purchase price of $205,000 = $1,000 higher than Buyer (B) due to the escalation.
- Offer to pay a set amount in cash to the seller if the appraisal from your bank comes in short of what the overall purchase price has been agreed upon in the contract.
When the demand (buyers) is high and the supply (properties for sale) is low than prices get inflated. Your bank/lender will put a value on the subject property of purchase. Since buyers are driving up prices and competing for homes, a lot of times values from appraisers will come in short of what the agreed upon purchase price is. If you offer the seller a few thousand in cash to pay over the appraised value from the start, it is more enticing to a seller and also shows you are in good financial standing.
- Get rid of “The Agreement To Remedy Period” in your contract.
Keep in mind, I am NOT saying not to get a home inspection. Home Inspections are crucial. A zero Agreement To Remedy is showing the seller that you as a buyer are not going to ask for all minor issues with the house to be fixed. If there is a major issue with the home such as structural damage, mold, fire hazards or some other safety concern or major expense than you can disclose it to the seller and re-negotiate. If the seller does not want to re-negotiate than you can walk away because you are protected with your home inspection clause. Chances are that the seller will try to work with you to come to an agreement for the major repair to be made because if they fall out of contract with you, they by law need to disclose what the issue is with the home on a Residential Property Disclosure before putting it back on the market anyway.
- Don’t ask for a home warranty to be paid for by the seller.
You can always pay for one yourself. It may not seem like a big cost to the seller but when you are competing with other offers, this is another way for your offer to stand out.
- Offer to pay a portion of the sellers closing costs.
In the state of Ohio, the seller is responsible for paying all the fees involved in a real estate transaction unless stated otherwise in a purchase agreement. They pay title fees, legal document fees, commissions to both the buying and selling brokers, taxes, ect. If you as the buyer offer to take care of a portion of those fees with your offer, it not only saves them cost from their overall net profit, it helps to keep from inflating the overall purchase price of the home. The reason this is a good tactic is because you as the buyer will pay less over the length of the loan if the purchase price is lower and it helps prevent a large gap between purchase price and appraised value.
- Write a letter to the seller showing why their home is perfect for you!
Tell them about your family, what you do for a living, send them pictures of your family and your kids. This can be emotionally effective to a seller knowing that their home is going to someone who will appreciate it and has taken the time to reach out to them with dialog and faces.
If you are buying in this crazy Central Ohio sellers market right now, please remember these tips to put your offer ahead of the competition!