How Do I Get an Offer Accepted on a Competitive Property Without Overpaying?

How Do I Get an Offer Accepted on a Competitive Property Without Overpaying?
Clint Edwards
Post Date: Updated:

When interest rates for home loans are low, a seller’s market develops. Find out what you need to know about making a competitive offer without overpaying for your new home. The secret to finding the sweet spot for an offer above asking price involves recognizing when a bidding war is developing, and knowing when to walk away.

These tips can help you get an offer accepted against stiff competition without going so far over asking price that you end up overpaying.

1. Work With a Reputable Lender

Work with a reputable lender that has a solid online presence. Then let the listing agent and seller know who you’re working with. If they can see lots of good reviews it will match your credibility with that of your lender.

2. Get Your Preapproval Underwritten

Go one step beyond a preapproval and get your loan application fully through the underwriting process for your preapproval. Then ask for your preapproval letter verifying you’ve been fully approved by underwriting. This assures a seller that there aren’t any unpleasant surprises waiting at the end of the underwriting process and that you can likely close without delays.

3. Utilize Your Loan Officer

Ask your Loan Officer (LO) to call the listing agent to assure them that you’re qualified. This personal touch shows that your lender has confidence in you and can make a big difference in how the seller views you.

4. Do a Pre-Inspection

Doing a pre-inspection allows you to waive inspection contingencies when making an offer. You’ll be buying the home “as-is.” If it is a newer home, the pre-inspection shows no cause for concern, and you feel confident in your ability to absorb any needed repairs or renovations, this can tempt a buyer to accept your offer and get the sale done.

5. Waive the Appraisal Contingency

If you have flexibility with the down payment and don’t care if the appraisal comes in low, waiving the right to walk away because of a low appraisal can help show the buyer you’re really serious. The worst that can happen is that the appraisal will come in low and you’ll have to bump up your down payment to cover the difference between the anticipated appraisal amount and the actual appraised value.

6. Use an escalator clause

Build an escalator clause into your offer that will automatically raise your offer a set amount above any offer that comes in above your own. You can set this up so that you continually beat out competing offers, all the way up to a preset limit. That way you automate your side of the bidding war and stay on top of the seller’s list without worrying about going over your budget.

7. Shorten the Time to Close

You can utilize a shorter closing timeline to motivate a seller who is getting lots of offers but who may be under pressure to sell fast. If you wave certain contingencies, are fully pre-approved all the way through underwriting, and can take possession swiftly, you can offer a fast path to closing and make yourself even more attractive to the buyer.

8. Offer a Rent Back

On the other hand, if the seller wants to sell but then needs time to arrange other housing, offering a rent back can help you seal the deal and give them time to move in peace after closing. You can arrange the rent back terms in your favor, to cover mortgage payments and other costs until they move out.

If you end up in a bidding way, be aware that at some point, your dream home may simply cost more than you can afford. That’s when it’s time to readjust your goals and start looking elsewhere.

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