During any hot market, going the extra mile to make your offer stand out can be the difference between securing your dream home and heading back to the drawing board. Many markets in Chicagoland have been sizzling at record levels in recent months, and many homes continue to see multiple offers coming in within a short period of time. But not all offers are the same, even if they are very close in dollar value. Let’s review some of the ways that you can strengthen your offer in a tight market and close that deal.
Start with a strong pre-approval. The first step in any home purchase should always be getting your mortgage pre-approval, and a hot market is no time to skimp on that. A strong pre-approval letter should be written by a real human and signed by a human, preferably one that will answer the phone and verify the information therein in short order. While many online services offer quick and easy pre-approvals, it is often difficult for the seller’s side to reach a direct contact they can trust for verification, and it could send the incorrect message that your financial standing isn’t sound enough to stand up to harsher scrutiny. Go in with a strong starting offer. This is also not a great time for lowballing the initial offer. Always discuss the specifics of your local market with your agent, but generally speaking in the Chicagoland area, inventory and interest rates are low, and buyer demand is high. This means that you will need to come in strong with your initial offer. A low offer could leave you immediately below those of competitors or vulnerable if a better offer comes in while you’re negotiating. Negotiate quickly as needed, but try to avoid sparking a bidding war rooted in a weak initial offer. Get strategic with your offer. If you do find yourself competing against multiple offers, it could be worth discussing options like an escalation clause or as-is clause with your agent. An escalation clause dictates that your offer will automatically increase to best the other one, up to a certain limit. The as-is clause tells the sellers that you won’t ask them to fix or repair anything based upon the home inspection — you’ll be taking the home “as is,” and covering any necessary improvements yourself. The clause can give the sellers tremendous peace of mind and simplifies the process for them. Another financial tool you can utilize is to offer to pay the difference between a home’s price and appraised value if the result of a bidding war has pushed the purchase price up significantly. Be flexible with the terms. There are also other ways you can put your offer ahead without spending any extra cash. Offer flexible terms, such as letting the sellers dictate whatever closing date works best for them, or suggest a leaseback option which allows the sellers to stay in the home even after the closing date for a set amount of time. This typically lasts a week or two in order to buy time for the sellers’ next home to be ready, but can last longer if needed. In general, the less contingencies in your offer, the better.
Work with your agent to craft a clean, strong initial offer and be prepared to move quickly. Utilizing some of the tools discussed here can make your offer the winning one, sometimes without even outbidding the others.