How to make your home offer stand out

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The current housing market remains unusually competitive during the pandemic, and that means buyers may need to try some extra tricks to get their offers accepted by sellers. According to Kevin Kieffer, a broker associate with Compass’ EastBayPro Team in the East Bay area near San Francisco, houses for sale in the communities where he works routinely get between six and 20 offers.

If you’re getting ready to buy a new home, here are some of the things you should and shouldn’t do to help your offer stand out.

Do: make your highest offer first

Nine times out of 10, a seller is going to favor a higher price above all other factors. Make sure you’re shopping for houses within your budget, and don’t let your emotions get the better of you. No matter how much you may love a property, you need to be ready to walk away so you don’t wind up with a mortgage you can’t afford. Don’t undersell yourself either. If you really want a house and can afford to offer a little extra in a competitive market, that could be the key factor in getting you to closing.

Do: get preapproved for a mortgage

Going through the process of mortgage preapproval can be tiresome, especially if you don’t ultimately get the home you’re trying to buy. But, being a preapproved buyer can show a seller that your offer is serious and that you can afford the price you’re offering.

To get mortgage preapproval, you’ll need to submit a bunch of financial documents to your lender and allow them to run a credit check. Then, they will determine how large a mortgage they’re willing to finance for you, and will provide you with a letter to certify their offer.

Showing your seller that your financing is already in the works can give them some assurance that there’s one less roadblock to closing.

Do: remove as many contingencies as possible

In competitive markets, the fewer demands you make as a buyer, the more likely it is that your offer will be accepted. Contingencies come in many forms, and the fewer of them you have, the more attractive your offer will be.

One kind of contingency is an appraisal contingency, which normally allows your offer to go down or gives you an out from the deal before closing if your lender thinks the property is worth less than you’re planning to pay for it.

If you get rid of the appraisal contingency, Kieffer said, “no matter where it appraises you’re still buying the property” at the originally agreed-upon price.

Another common type of contingency is a physical one.

“You’re accepting the property in its current physical condition,” Kieffer said, “No matter what you find, you’re still buying the property.”

Getting rid of these contingencies can be risky for buyers though, so make sure you understand what you’re getting into with your offer if you do.

You could wind up with a house that is worth less than you paid, which might mean your mortgage will be underwater from the start, or you could be on the hook for expensive repairs if your home inspection reveals any significant structural issues. If you’re planning a major remodel after you move in, getting rid of the physical contingency is less of a risk.

Do: put down as much as you can

Another way to get a seller’s attention is to limit how much of the purchase you have to finance.

All-cash offers are often accepted, even if there are financed offers for more money, because those transactions are usually more streamlined and tend to have lower closing costs. Many sellers also prefer no-loan contingencies, where the buyer makes a substantial down payment and funds the rest of the purchase some other way.

Don’t: write a love letter

Many buyers think they’ll have a better chance of getting their offer accepted if the seller likes them personally. While that may be true, it can be risky to engage in personal outreach.

Kieffer said in his area it’s explicitly no longer allowed, and the National Association of Realtors also strongly advises against it because it can be the start of a slippery slope toward housing discrimination.

“To entice a seller to choose their offer, buyers sometimes write ‘love letters’ to describe the many reasons why the seller should ‘pick them,’” NAR wrote in a recent blog post. “While this may seem harmless, these letters can actually pose fair housing risks because they often contain personal information and reveal characteristics of the buyer, such as race, religion, or familial status, which could then be used, knowingly or through unconscious bias, as an unlawful basis for a seller’s decision to accept or reject an offer.”

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Written by
Zach Wichter
Mortgage reporter
Zach Wichter is a mortgage reporter at Bankrate. He previously worked on the Business desk at The New York Times where he won a Loeb Award for breaking news, and covered aviation for The Points Guy.