Tips for Outcompeting Other Buyers in 2013Posted by Kevin Hughes on Monday, February 18th, 2013 at 9:48am.
In the current, low-inventory real estate market it can be difficult to buy a home before someone else does. It often comes down to a bidding war, which is common to real estate purchases. As much fun as heated competitions can be, you may get carried away and break your budget. Knowing how to maneuver the intensely competitive buyers market that 2013 has promised to be can make all the difference in your successful home purchase. And by success, we mean that you found the right house, at the right price, and at the right ime for you. Here are a few tips for ensuring that when you find your house, you get it before the 15 other buyers who have toured it.
Your LenderAlmost all home purchases are supported by the trust of a mortgage lender. This is typically your bank, but can be a specialized company. When you decide that you want to purchase a home, talk to your lender before you begin house hunting. That way, you can resolve every financial facet of your potential home purchase before you even look at any homes. Obtain a letter of pre-approval, stating that your lender will uphold your offer. With a letter of pre-approval and a sure budget set, you can make offers with speed and confidence.
Cold, Hard Cash
Another method to increase the appeal of your bid is to bring along cash and the paperwork to prove that it’s legitimate. Few sellers can pass up an offer that is physically present. In addition to a
wad of cash on hand, indicate that you are willing to put a downpayment of at least 20% on the home. In a competitive market, this will place you above and beyond other buyers.
Work with Your AgentIf you hire a buyer’s agent, which is highly recommended, have him or her watch the neighborhoods of interest and communicate with the seller’s agent. These real estate professionals can help you determine the reasons that the seller has put their home on the market, and the actions you need to take to make your offer the most appealing. For example, if the seller does not yet have a new abode to replace their house after you buy it, offer a month of free rent and give them time to work it out. Any help you can provide will increase the seller’s willingness to accept your bid. With the help of your agent, you’ll have access to homes and information as soon as it hits the market.
Keep in Touch with an InspectorTo ensure that the home you buy is in good condition, ask for an inspection report or, better yet, keep contact with an inspector. Because there are so many buyers on the market, it is difficult to put a home purchase on hold in the name of inspection, especially if the other buyers do not expect one. But the last thing you want to do is to buy a home with a moldy basement. If the seller has recent paperwork on the condition of the home, read over it carefully. If not, having your own inspector on call is to your advantage. That way, even if you are in a rush, you can invite them to come with you on your tour for a brief scan of the home. And if you do have time to order an inspection, you know someone who is just a phone call away.
Consider Using an Escalation ClauseIf you know that you can afford it, issue your agent an escalation clause. An escalation clause is instruction to your agent to offer a set amount higher than the highest bidder. It is a risky maneuver; you do not want to overspend on a home. But keep in mind that you can place a ceiling limit on the offers your agent makes. If you get outstripped, rest at ease with the consolation that you did not break the bank and that your competitor likely overpaid.
With bank statements, loan pre-approval, agents, inspectors, and techniques in your armoury you can enter the real estate market with confidence and surety. Prepare thoroughly preceding your search for a new home, and you’ll hit the market running.
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