In a competitive real estate market, it’s now pretty common to make multiple offers before getting an offer accepted. But even knowing this, it still stings to get your offer rejected when it’s a property you really wanted. While there are no guarantees, there are some things you can do to better your chances of having your offer approved.
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Realtor.com recently surveyed homebuyers who successfully purchased their homes in 2021 to get their insights into how they could get the homes they wanted in this competitive environment. Here’s a look at their financial secrets.
Have Enough Money Saved for a Sizeable Down Payment
While you can get a home for less than 20% down, in a competitive market, it’s in your benefit to aim for at least that. But getting that amount of money saved can seem impossible.
The Realtor.com survey found that recent homebuyers used a number of different tactics to save up for a down payment: 29% cut back on daily spending, 23% skipped vacations, 17% moved home or in with family to save on rent and 11% paused student loan repayments. Other homebuyers focused on making extra money — 27% sold investments, 25% saved financial windfalls like tax returns and bonuses, 20% saved their pandemic stimulus checks and 20% started a side hustle.
Some homebuyers also relied on outside help to save for their down payment. The survey found that 20% took advantage of a down payment assistance program, 20% were given financial gifts from family or friends, 19% borrowed from their 401(k) and 15% borrowed from their family or friends.
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Be Willing To Close Quickly
The survey found that the most common tactic used by successful homebuyers was offering a quick closing, with 29% employing this tactic.
“Sellers who want to close in a hurry will appreciate this option,” said Clare Trapasso, deputy news editor at Realtor.com.
However, it’s important to note that this isn’t always possible and/or may not be the best option for you.
“You need to find a lender who can close quickly if you aren’t making an all-cash offer,” Trapasso said. “It also doesn’t leave you a lot of time to get your mortgage, your movers and everything else in order.”
Make an All-Cash Offer
While this is not always financially feasible, if you can make an all-cash offer, it will make your bid more appealing. Over a quarter (26%) of successful homebuyers said they used this tactic to seal the deal.
Waive the Inspection or Other Contingencies
One-quarter of successful homebuyers in 2021 waived the inspection or other contingencies, such as an appraisal contingency, the survey found. However, it’s important to note that doing this comes with risks.
“The last thing you want is to buy a home with a leaking roof and a busted boiler,” Trapasso said. “This can cost you tens of thousands of dollars to fix, which many buyers don’t have sitting around after buying a home. Waiving an appraisal contingency can also financially penalize buyers if their lender determines the house is worth less than the buyers bid on it — buyers may be on the hook for coming up with the difference, which can be a significant amount of cash.”
Offer Significantly Above the Asking Price
Homes are routinely selling for above the asking price in this hot housing market. Successful homebuyers know this and preemptively make offers that are well above the asking price — this tactic was employed by 24% of the buyers surveyed.
To do this without going over budget, it’s best to look at homes priced well below what you are actually willing to pay. Three-quarters of recent homeowners (73%) said they looked at homes at lower price points so they’d have room in their budget to bid over asking.
“Deciding on what your target price point should be when looking for a home really depends on your local real estate market,” Trapasso said. “In some of the most expensive parts of the country, buyers are expected to offer six figures over the asking price. In others, it’s just a few thousand dollars. The best thing you can do is talk to a local real estate agent about what you should expect. You can also look at websites, like Realtor.com, to see recent sale prices in the areas where you’re looking to buy and how much they sold above the asking price.”
Let the Sellers Stay in the Home as Long as They Need
Being flexible about your move-in date can also make your offer more appealing. Twenty-three percent of successful homebuyers said they offered to let the sellers stay in the home until they were ready to move out.
While this can make your offer appealing, you should be cognizant of the potential downsides. “This could be an inconvenience for buyers, particularly those who need a place to live,” Trapasso said. “It also makes it difficult for them to figure out a rental lease if they don’t know when they will be moving out and into their own homes.”
Look Outside Your Preferred Neighborhood
Two-thirds of recent homeowners (66%) looked at homes outside their preferred neighborhood to save money, the survey found.
“If you’d like to buy a home but are priced out of your ideal neighborhood, it doesn’t hurt to look a little further out,” Trapasso said. “Ask yourself what really matters to you. Is it a quick commute to your job? A walkable community? Lots of restaurants and entertainment nearby? You may find that you can find all of these things just a little further out at a more attractive price point. Or you may find that you don’t mind driving instead of being able to walk to entertainment and restaurants if it means you can afford a larger home.”
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