How to Make Your Offer to Purchase More Attractive to a Home Seller

The Spring Real Estate Market appears to have started in Kitchener - Waterloo already.  In the last week I have been involved in 2 multiple offer situations...

So, if you find that perfect home and other people are putting offers on it and you have to compete, how do you make your offer more attractive?

Plan Ahead
You have to plan four months before you’re going to buy.  Check your credit for accuracy and avoiding making any big purchases or taking on any big debt during this time.

Debt brings down your credit score and increases your debt-to-income which are two critical things banks look at when qualifying and preapproving you for a loan.

If your debt-to-income ratio is too high, experts recommend paying down as much debt as you can to lower this ratio.

For more information on debt and credit score click these links debt service ratio and credit score

Set Your Home Price
“Don’t look at a $300,000 home if all you can afford is $250,000,” says Ameer. Less supply on the market increases the likelihood for multiple offers, and you won’t be able to compete. “If properties are selling at 95% of asking price, don’t think you’ll get a deal at 85% of asking price,” she says.
If you do spot a great deal on a house, don’t wait days to make an offer, warns Corbett. Since time isn’t on your side, learn how to spot a great deal by researching an area’s home prices.

“Do a little due diligence and go to open houses—do your homework,” says Corbett. Being educated will help you negotiate and could prevent you from paying more for a house than it’s actually worth because you’re emotionally involved.

Know that Cash is King
The more cash you have, the more appealing you are as a buyer. Putting 20% or more down makes you look more financially stable and gives sellers comfort that you’ll qualify for a mortgage, says Corbett.

Cash can cover a multitude of problems when you make an offer, whether it’s difficulty with the mortgage process or a lower-than-expected appraisal. “A buyer can contribute more cash to cover the different between the appraisal and offer price,” says Blomquist.

If your appraisal is low, don’t expect the appraiser to come up in value, says Ameer. “Appraisers are under scrutiny with the banks and they have to justify everything they do.” They’re required to follow Uniform Standards of Professional Appraisal Practice (USPAP) guidelines, as well as lender guidelines.

Appraisers use surrounding properties for comps, says Ameer, and if there are only foreclosures, that’s a bad hand to be dealt. You can always review the appraisal for discrepancies and suggest different comps but don’t expect the value to change.

Get Preapproved before Your Search
Getting prequalified for a mortgage gives a ballpark for what you can afford to buy and will streamline your search process.

If you’re financing your house with a mortgage, have a pre-approval letter with you and if you’re paying cash, have proof of funds that shows you’re good for it.

Getting preapproved will also help you to compete with an all cash buyer.

When you know what you can afford and are preapproved, you won’t be shopping outside of your price range. It makes you a much stronger buyer when you can turn in that preapproval letter with your offer.

Limit Your Conditions
Experts suggest having as few conditions as possible to be an alluring buyer. Don’t overcomplicate your offer to the seller. Certain conditions based on your ability to get a mortgage, the appraisal and home inspection are standard, but piling on more could make the seller less inclined to work with your offer.

Make your offer based on a satisfactory home inspection. It gives you the opportunity to walk away if you find in an inspection that there are too many problems with the house.

Making your offer conditional on you selling your house first will make you a less appealing buyer. If you need to sell your house before buying a new one, then sell your home first and rent or move in with family or friends while you look for your new home.  As a seller, you’ll sell that home quickly. Then as a buyer, you’re much more appealing than a buyer whose offer is conditional on a sale.

Add a Personal Touch
Sellers like to hear why you want to buy that house. You become a person who really loves and appreciates the home instead of just a number.

Be Flexible with Closing Dates
Let the seller know that you would be flexible on the closing timeline. Find out when the seller would ideally like to close on the house and see if you can match it.

As a REALTOR, my job is to provide the best guidance possible and help you reach your goal of being a home homeowner.

Please contact me today to discuss the market or to receive a free Home-Buyer's Toolkit.