Top 5 Tips For Buying A Home In A Competitive Market

Top 5 Tips For Buying A Home In A Competitive Market

Housing market across the country are heating up - new and existing home sales are rising again , but home inventory is still relatively low. As a result, home buyers are finding that making a winning offer in a competitive market is tough to do. Here are our top five tips for submitting an offer that will stand out:  

1. Get pre-approved for a loan before placing an offer.  Some lenders will use the terms 'pre-qualification' and 'pre-approval' interchangeably - however, they're not the same.  Pre-qualification typically involves no more than a conversation with a lender about your financials, while pre-approval involves filling out a formal application and having a lender do more in-depth analysis about your credit worthiness (typically including a full review your credit report) and overall ability to secure a loan. 

2. Make a substantial earnest money deposit (EMD).  Earnest is money that you put toward a home purchase when you submit your offer.  It's also money that you would not receive back if you were to pull out of the contract in breach of the terms.  A significant EMD indicates to the home sellers that you're serious about your purchase and are likely to see it through.

3. Include a cover letter.  A cover letter serves to summarize and personalize your offer.  Use it to tell the seller what you love about the home - when the seller has an emotional connection to the house or has worked to improve it, they'll often want to sell to someone who appreciates the same things they do. 

4. Be aware of how contingencies affect the impression of the offer.  Talk with your Realtor while you're writing your offer - make sure they explain how the various contract contingencies will affect the sale timeline, and acceptability, and thus the likelihood that your offer will be selected.  There are certain contingencies that are necessary to protect your interests, and then there are those that are a bonus and are a nice to have.  In a seller's market where often multiple offers are placed on a single property, the more contingencies included in an offer typically results in the less likely the seller will be willing to accept.  Remember, your goal is to present an offer that the seller is the most competitive, which may not be the one with the highest offer price.  Depending the circumstances, in many cases sellers will choose the offer with the least restrictions even if it is for less money. 

5. Put down as much money as possible for down payment. A sizable down payment is a good sign that you're a serious and financially responsible home buyer.  It's usually a good indication that you'll be able to get financing, making you more attractive to home sellers.  While it may look good to a seller, there are circumstances where a large down payment might not be in your best financial interest which is why we recommend our buyers to seek advice from professional loan officers such as Scott Kinne with First Heritage Mortgage.  

Michael Lorino Headshot
Phone: 703-991-8762
Dated: October 6th 2013
Views: 2,258
About Michael: Michael was commissioned a 2nd Lieutenant in the U.S. Marine Corps in 2001. He has served around the...

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