Spring House-Hunting Tip #4: Build Your Home-Buying Dream Team Before You Bid
If spring-cleaning season has you in a hyper-organized mood, channel some of that spirit into your house hunting—in order to be a serious frontrunner in a bidding war, you’ll need to have all of your ducks in a row.
So not only will you need a savvy real estate agent, but you’ll also want your lender, inspector and attorney at the ready so you can act fast, says Yocum.
And let’s not forget completing your mortgage application and having your loan amount determined in advance. “We move at breakneck speed in San Francisco,” Clark adds. “All of my clients must absolutely be 100% pre-approved before submitting an offer.”
Seaton suggests even taking it a step further. “To make themselves more competitive, the most successful buyers are going beyond the pre-approval process to become fully approved prior to purchasing,” he says. “Not all lenders offer this possibility, but some do.”
And the better known your lender is locally, the more likely you’ll win the confidence of the seller. “No real estate agent wants to recommend that his client accept an offer from a buyer who dug up a lender on the Internet,” he adds.
For a seal-the-deal final touch, Yocum suggests drafting a template of the personal letter you’d send to the sellers of a home explaining how much you love their house and why you want it.
“Then, when you find the right home, you can drop in the address, sellers’ names and specifics about the home,” he says. “Sellers always respond positively to a personal letter, and if buyers are competing, it might be the deciding factor.”
All these perks can add up to much more than you think. Seaton represented a seller who ultimately went with a lower bid because the offer had no contingencies.
Spring House-Hunting Tip #5: Keep Sweeten-the-Deal Moves in Mind
So you’ve finally found that dream Tudor on a half-acre—but you’re stuck in a bidding war with another equally prepared buyer. How do you win by a nose?
For one, include an escalation clause, along with your offer, suggests Seaton. This is an amount that you’d automatically be willing to pay above a competing bid.
For example, let’s say you add an escalation clause of $3,000 to your bid of $200,000. If a second offer comes in at $205,000, your bid would get bumped to $208,000. If you’re in a hot market, a significant escalation factor could really pique seller interest, Seaton adds.
Yocum also suggests seeing if there are contingency clauses you’re willing to forego in your real estate contract. Contingencies are terms of a contract that must be met or the buyer or seller can walk away from the deal; home inspection, appraisal and financing contingencies are among the most common.
To be sure, “all of these have various levels of risk that not all buyers are willing to accept, and you should consult with your team before [removing] any of them,” he cautions. After all, you want to protect your earnest money if you suddenly realize your dream home has termites, or an appraiser discovers you’re paying far more than market value.
That said, doing due diligence prep work can help you feel better about removing contingencies.
For instance, getting fully approved for a mortgage can help you remove the financing contingency, says Seaton. “And absolutely conduct a pre-inspection prior to making an offer, so that you do not need a home inspection contingency in the offer,” he adds.
There are also smaller carrots you can offer, such as finding out when the seller prefers to close and using that closing date in your contract, says Yocum. Or close as quickly as possible and offer to accept rent payments from the sellers, adds Clark.
All these perks can add up to much more than you think. Seaton, for instance, represented a seller earlier this year who ultimately went with a lower bid because the offer had no contingencies. “We see this very often,” he says. “Many sellers prefer no risk to a few more dollars.”
Ultimately, what all the advice boils down to is making sure you don’t get caught unprepared when that perfect property is finally up for grabs.
“The name of the game,” Seaton says, “is very much figure out what you want; get your financing straightened; and when the right property comes along, be ready to pounce—and quickly.”