You just lost your bid to purchase your dream home to another offer...again. And it seems that while you have continually made offers to homes that you've found appealing, you have lost as many times as well. And you know you will continue your home search, and make another offer. It's almost a dreaded expectation that you're about to lose again to another better offer.
So let's take one step back, and see what's going on.
What's in your offer? Are the terms of your offer competitive enough? Here are some factors that the seller would consider in deciding which offer to accept:
- Cash offer. If you have the cash flow, you are in a better position to win the bid over offers that need financing. All-cash transactions close faster and there is no loan contingency to worry about.
- Down payment. Sellers are drawn to offers that have less financing involved. Consider at least a 10% down payment if you are able to afford it.
- Earnest money deposit. The higher your deposit, the more likely the seller is going to consider you a serious buyer since you are willing to put that much money into escrow during the transaction period.At least 5% earnest money deposit may get you a second look from the seller. Keep in mind, though, that when all contingencies have been removed and the sale falls through due to the buyer's fault, you stand to lose some or all of your deposit.
- Seller credit. Are you asking for some seller credit to pay for your closing costs? Clean offers that don't request for any seller credit will get the seller's attention first.
- Time to close. If your offer asks for a 45-day close, that may be longer than necessary, especially if you already have a pre-approval. Sellers want to close quickly, so 30 days is typical, and shorter than that is even better.
What's the market like? Are buyers scrambling for the same homes that you're after? Has your Realtor® given you some direction on what the pattern is on what the variance is between sold price vs the list price? If not, ask your Realtor® to examine the recently sold properties to confirm whether the sold prices are generally higher than asking.
If it is so, and you are offering lower than the list price, then it's time to be more realistic with your offers. Your offer may be never get past a 3-second browse from the seller if you can't even meet the asking price. Obviously, the offer price will also depend on the condition of the property, and the extent to which repairs, if any, are required
Lastly, are you looking outside of your price range? After realizing that list prices are often overshot by $5,000 to $10,000, consider adjusting your price criteria. Find homes that are priced lower than your target price, so that there is room to bid higher. And when you find the home of your dreams, offer like no one else will beat you to it!
As the famous publisher, Arthur Pine, once said:
"Your biggest break can come from never quitting. Being at the right place at the right time can only happen when you keep moving toward the next opportunity."
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