When it comes to buying a home in a seller’s market, where demand for houses exceeds supply, it can be challenging to get your offer accepted.
To increase your chances of success, consider making your offer as clean as possible, avoiding asking for personal property, offering above the asking price, putting down a stronger earnest money deposit, waiving the appraisal contingency, making a larger down payment, adding an escalation clause to your offer, making a cash offer, making sure your offer is complete, and offering a month of free occupancy.
Present your offer in a clear and straightforward manner
To make your offer as clean as possible, you should waive all contingencies to make your bid more competitive and appealing to the seller. A clean offer should not be contingent on the sale of another property or have any other financial constraints.
It should also be free of seller concessions, which are requests a buyer makes outside of the offer price, such as a request for help paying closing costs. When a seller is receiving numerous bids, a clean offer can help you stand out and increase your chances of having your offer accepted.
Refrain from inquiring about someone’s personal property
When making an offer on a house in a seller’s market, it’s important to avoid asking for personal property that belongs to the seller. This includes items such as furniture, appliances, or decorative pieces that are listed as exclusions in the sale.
Asking for personal property can make your offer less attractive to the seller, as they may prefer an offer that is clean and doesn’t include requests for additional items. In a competitive market, the seller may choose an offer that doesn’t include requests for personal property over one that does, even if the latter offer is higher in price. It’s best to simply focus on the house itself and leave requests for personal property out of your offer.
Propose a higher amount than the asking price
When it comes to making an offer on a house in a seller’s market, it is important to consider offering above the asking price. This is because there are likely to be multiple buyers competing for the same property, and in order to stand out, it is often necessary to make a stronger offer than the competition.
Offering above the asking price can demonstrate to the seller that you are serious about buying the property and willing to pay more to secure it. Keep in mind, however, that you should be mindful of the home’s value and not offer an amount that is significantly above market value. It is important to strike a balance between making a strong offer and not overpaying for the property.
Increase the amount of the earnest money deposit submitted
An earnest money deposit is a sum of money that a potential home buyer puts down as a show of good faith when making an offer on a property. It is usually a percentage of the purchase price, and it is held in escrow until the sale is finalized.
By putting down a stronger earnest money deposit, you are demonstrating to the seller that you are serious about purchasing the property and that you are financially able to follow through with the transaction.
A larger earnest money deposit can also give you a competitive edge in a seller’s market, where there may be multiple offers on a property. Keep in mind, however, that the amount of the earnest money deposit should be reasonable and in line with the purchase price of the property.
It is important to carefully consider the terms of the earnest money deposit and to have a clear understanding of any potential risks or obligations before making this commitment.
Remove the requirement for an appraisal contingency
An appraisal contingency is a clause in a real estate contract that allows the buyer to back out of the deal if the property does not appraise at a value equal to or higher than the agreed upon purchase price.
In a seller’s market, where competition for homes is high, waiving the appraisal contingency can make your offer more appealing to the seller because it shows that you are confident in the value of the property and are willing to move forward with the purchase regardless of the appraisal.
However, it is important to keep in mind that waiving the appraisal contingency also means that you are taking on more risk, as you will be responsible for paying any difference between the purchase price and the appraised value if the property does not appraise at the expected value.
Increase the initial payment towards the loan
If you’re looking to win a bidding war in a seller’s market, one way to make your offer more appealing to the seller is to put down a larger down payment on your loan program. A larger down payment shows the seller that you have the financial means to follow through with the purchase and may make them more confident in accepting your offer.
Additionally, a larger down payment can often lead to lower monthly mortgage payments, which can be an attractive benefit for the seller. It’s important to keep in mind, however, that a larger down payment may require you to have more upfront cash available and may also impact your overall loan amount and interest rate. It’s important to carefully consider the financial implications of a larger down payment before making this decision.
Include a provision for increasing your offer in the event of competing bids
An escalation clause is a provision in an offer to purchase a home that allows the buyer to increase their offer by a predetermined amount if another offer is made on the same property. This can be a useful tool in a seller’s market, where competition for homes is high and multiple offers are common.
By including an escalation clause in your offer, you can ensure that your offer is competitive without having to blindly guess at what other buyers may be willing to pay. To use an escalation clause effectively, you will need to set a maximum price that you are willing to pay, as well as the amount by which you are willing to increase your offer if necessary.
It is important to keep in mind that an escalation clause may not always be successful, and the seller may choose another offer even if it is not the highest. However, it can be a useful way to make your offer stand out and increase your chances of success.
Submit an offer to pay for the property in cash
Making a cash offer can be a strong negotiating tactic in a seller’s market. A cash offer means that you are able to pay for the entire purchase price of the home upfront, without needing to secure financing through a mortgage or loan.
This can be appealing to sellers because it means that there is no risk of the deal falling through due to financing issues, and the seller can receive the full purchase price right away. However, it’s important to be aware that making a cash offer may not always be feasible, especially if you do not have a large amount of liquid assets.
Additionally, you should be prepared to provide proof of your ability to pay in cash, such as bank statements or investment account statements. If you decide to make a cash offer, it’s also a good idea to consult with a financial advisor or real estate attorney to ensure that it is in your best interests.
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Arsh Syed, a real estate agent in Toronto, offers services to help property owners buy, sell, or rent their homes and manage the transaction.
He aims to establish relationships and provide exceptional service to improve the housing crisis in Toronto. By hiring him, property owners can reduce risks, save time, and save money.
For more information about his services, you can visit https://www.real-estate-in-toronto.com or contact (416) 844-2217.
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