As you’ve probably heard, buying a house right now is a little bit crazy-town. Inventory in the Twin Cities in February was down 14% from 2018, ushering in another spring of multiple offers, especially in the under-$400,000 range.
It’s a pretty sure bet that if a home has multiple offers, it will sell for over list price (unless it is in foreclosure or falling apart). How much over is anybody’s guess. But it’s important to note that while money is important, it isn’t everything. In the end, sellers want to be assured that things will proceed without a hitch, and that, above all, the ‘winning’ buyer is able to obtain financing and close on time.
Here’s how to put your best foot forward:
1. Make a connection with the seller.
Write a personal note about why you love their home. Be specific and talk about what you will truly enjoy about living there.
2. Make your earnest money memorable.
1% is standard, but 2% or 3% will show that you are serious and committed.
3. Make a substantial down payment.
This translates as financial strength. Can’t afford a large down payment? Then make sure your lender has stellar credentials, a reputation for closing on time, and is willing to go to bat for you.
4. Minimize or remove contingencies.
I never recommend not doing an inspection, but make the time frame as short as possible. Offers that are contingent on the sale of an existing home are nonstarters. Figure out another strategy, such as getting a bridge loan, selling first and finding a short-term rental, or living with friends or parents for a few months.
5. Be flexible.
If you can, let the seller select their preferred closing date. Sellers with very young children or those who are moving out of state may well sacrifice a few thousand dollars to ensure an easy transition.
6. Have an appraisal plan.
When houses sell $5,000, $10,000 or more over list price, there is a decent chance that it won’t “appraise” – that is, the lender will pronounce the home’s value below the agreed upon purchase price and will not fund the loan. You will need to either come up with the difference in cash or renegotiate the price at that point.