Despite the current public health concerns with COVID-19 and the economic recession (which isn’t hurting the housing market), the real estate market in the Boise area is heating up more than it was in 2019. Boise is not immune to the national affordable housing shortage, which makes it a seller’s market. What helps the market for sellers is Boise’s attractiveness and affordability.
As a buyer in a hot, competitive market, you need every real estate tool at your disposal to find and buy your next perfect home. When you find the home you want to make an offer on, it is likely that there will be other people interested in that house as well. How do you get your offer to stand out? The most important thing is to ask your realtor. Here is a list of tactics you can choose that may help your offer stand out above the rest. They are not a guarantee for success, but they have worked in the past for tons of home buyers.
Above all else. Trust your realtor. Their sole goal is to serve your best interest and help you get into your new home.
Cash is king
It’s a fact in real estate that an all cash offer will always be the most tempting and most accepted offer. There is no hassle with financing or escrow and the sale can close quickly. In addition, buyers who provide an all-cash offer likely have more cash in reserve if their initial offer gets beat out. If you are unable to provide an all cash offer, put more money down upfront. A higher down payment, increasing your earnest money (more on that below), or paying for closing services can help your offer stand out. With Boise being a desirable market with incredibly low inventory and high buyer interest, winning bids will not be below the listing price. If the offers get too high, walking away may be the better option. Keep looking and save more money to help put more money down up front
Appraisal gap coverage
In a very hot and desirable market like Boise and the surrounding area, the winning bid may likely go over asking price. This could likely be more than what the house was appraised for. For example, say a house is listed for $300,000, and your contract offer is for $310,000. But during the appraisal closing process, the home is appraised for $306,000. You could pay the additional $4,000, or try to convince the seller to accept the home’s value of $306,000. Unless the seller is desperate to sell the home ASAP, this is a hard sell. Offering to pay the full $310,000 is much more appealing to the seller.
Increase your earnest money deposit
Earnest money is a deposit of typically around 1-2% of the listing price to show the seller you are serious about making an offer on the house. Earnest money is refundable if you back out of a contract due to issues stemming from inspection, financing, or a host of other issues. If you, as the buyer, increase your earnest money to 3% or more, it shows the seller that you are that much more serious about buying the home. The more serious a buyer is, the more attractive their offer looks to the seller. If you really want to be serious, you can make your earnest money non-refundable. However, this is not recommended because you will lose all of your deposit if another offer is chosen over yours.
Shorten the inspection period
During the home inspection, a license inspector will walk through the home and do a thorough assessment of the property, structure, and foundation of the home, as well as its internal systems. If you use a shorter window (3-5 days versus 10-12), the seller will know what, if anything needs to be fixed that much sooner. This can help with negotiations, or the sellers can make the required fixes and get back on the market sooner.
Cover closing costs
Offering to cover the closing costs in addition to the sale price is a very attractive move to sellers. This means that a $300,000 home will net the sellers $300,000 instead of $295,000 plus $5,00 in closing costs. However, this is hard to do for first-time home buyers, since they tend to scrape enough money together as possible to make a small down payment.
This tactic is very powerful for buyers. An escalation clause tells the sellers that they will top any other competing offers by a specified amount up to a certain purchase price. It’s basically saying that the buyer has a maximum price point of $X and are willing to beat any offer until that price point is met. The one drawback to escalation clauses is if there are too many of them for one house. Too many escalation clauses pile up and your offer can get lost, no matter how competitive it is. If this is the case, the buyer’s best chance for success is to submit an offer with your maximum bid and nothing else. Sometimes simple way is the best way.
Allow occupancy post-sale
It is very common that the seller will ask for time after closing to pack up, make arrangements, and vacate the property. Allowing the seller to get out when they are able makes your offer look better because it shows a measure of patience and flexibility. In the age of instant gratification, a little time to breathe is the best course of action. it also allows you (the buyer) to make sure everything is set for your move.
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