Get Real: Make your offer stand out

Posted by Beth Alois on April 3, 2013

The spring market is here with a good number of buyers and low inventory. Buyers realize that home prices are still low, but the historically low mortgage rates may not last beyond this year.

A good home in a solid location with a realistic listing price will attract multiple buyers and offers. Home buyers can make their offers stand out from the rest through one or more of the following strategies:

Price. Obviously, price tends to be the primary consideration for sellers. When you’re competing for a home, to get an edge, think about adding a price escalation clause stating that you will beat the highest offer by “X” dollars up to “X” amount. Cash offers can be more attractive to sellers as well. Although sellers will receive their money at closing whether buyers pay with cash or take out a loan, cash offers don’t require lender approval.

Financing. It’s not enough to be pre-qualified. Pre-qualification only tells how much you can afford. Pre-approval goes a step further. Your lender will thoroughly evaluate your application — including verifying employment information and financial disposition — then clear you for a loan of a determined amount. Having your loan pre-approved gives you a sizeable advantage by putting you on equal footing with cash buyers.

Good faith deposit. Buyers offering a larger-than-customary amount of “earnest money,” a deposit that accompanies an offer, may get a seller’s attention. By committing more money up front, buyers demonstrate greater sincerity and motivation to close the transaction. Your Realtor can guide you as to the appropriate sum for your specific transaction.

Contingencies. Consider minimizing contingencies, those clauses that allow buyers to back out of a contract if certain conditions are not met. For example, it’s common for buyers to make the purchase contingent upon their securing satisfactory financing. Offers with the fewest conditions tend to be more attractive to sellers.

From a contingency standpoint, first-time buyers are often better prospects for a seller’s home than move-up buyers. That’s because first-time buyers’ offers are not contingent upon the sale of a present home. Even if a move-up buyer has an offer in hand, that buyer’s offer may be contingent on another contingency, and so on down the line. If one transaction derails, they all might.

Considerations for short-sale and foreclosure transactions – Bank-owned properties represent a significant portion of today’s housing inventory. Competition can be most keen for these homes as their prices tend to be below current market value.

Banks conduct extensive research to set these prices and generally base them on current market value less the cost of required repairs. Make your offer based on your own check of comparable sales and other due diligence. Banks won’t get offended by a low offer, yet a realistic offer will more likely keep you in the running.

Remember, patience is essential when buying bank-owned property as the process can take up to six months and longer.

Work with your local Realtor to buy your dream home or investment property. His/her knowledge, skill and expertise will help you make sound real estate decisions.

* Beth Alois and Jim DeFrank can be reached at 610-388-3700. Prudential Fox and Roach, REALTORS is an independently owned and operated broker member of BRER Affiliates LLC. Prudential, the Prudential logo and the Rock symbol are registered service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide. Used under license with no other affiliation with Prudential.