Contrary to what many people thought would happen when COVID-19 was declared a global pandemic, the real estate market is still booming. Buyers are still buying, and inventory is still low. This means things move quickly, and homes often sell above asking price. Times are completely different than they were a decade ago. Gone are the days of extended negotiation periods and buyers asking for more, more, more. Negotiating an offer on a home can be tricky right now, especially since you’re likely to find yourself in a multiple offer situation. Here’s how to negotiate an offer quickly and effectively during a mid-pandemic seller’s market.
Be realistic and generous with your offer.
How low can you go? Not so much. Housing inventory is consistently low across most markets, which means there are more buyers than there are houses for sale. Don’t expect yours to be the only offer a seller receives. You’re going to have to find some way to make your offer more attractive than the others. Not only does your offer need to be realistic, it needs to be generous. It also needs to prove to the seller that you’re serious about buying their home and want to get a move on.
Show the listing agent and seller that you have the means to buy.
Don’t get pre-qualified or pre-approved. Go ahead and get a strong approval letter from a local lender who can work quickly. If you’re paying cash, have your proof of funds ready to go. If you’re getting a home loan, you should have a solid loan commitment before you even think about home shopping. Lenders have tightened up guidelines. Oftentimes, they want a higher credit score than they did in the past. Work with an experienced local lender who knows your specific market (and maybe even knows your real estate agent) and can get the job done quickly and efficiently.
Offer a large amount of earnest money.
The bigger the earnest money check, the more serious your offer looks to the seller. When the seller sees that you’re willing to put a large amount of money on the line, they’ll know you’re not likely to back out of the contract for any arbitrary reason. That said, make sure you protect yourself from potentially losing that earnest money by including financing and home inspection contingencies in your offer.
Forget about asking for any extras.
In a market that favors the seller, you’re much less likely to score any extras or freebies. Be careful about asking for too much, including closing costs or home warranties. Don’t ask for extra appliances or personal items unless specifically stated. In fact, you may want to offer to pay a portion of the seller’s closing costs, like the attorney fees and deed stamps. Offer to pay the HOA transfer fees as well. This will absolutely make your offer more attractive.
Write a personal letter.
Write a letter to the sellers telling them what you love about the home. Introduce yourself and your family, and tell them exactly why their house is perfect for you. Adding this personal touch to your offer helps the sellers see you as a real, live person, not just a bunch of numbers and letters on a contract. It may or may not help your efforts, but it certainly can’t hurt!
Have your agent call the listing agent.
It is absolutely imperative that you do not do this yourself, but ask your buyer’s agent to do so. Have them ask when the sellers prefer to close and what is most important to them in the contract. There’s some information the listing agent legally cannot share, but little things like these are fine to ask about.
The more flexible you are, the higher your chances are of the seller accepting your offer. Let them know that you’re willing to work with them in whatever capacity they need. If they need a quick closing, so be it. If they need to push the closing date out by a few weeks while they find a new place to live, do your best to make it happen.
While it may feel like you’re giving up an awful lot to be “the chosen one,” such is the nature of real estate. For many years, buyers had the upper hand. Now it’s time to be patient while sellers have their heyday. It’ll be well worth it once you have a completely accepted and signed purchase agreement and move closer to closing day.