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Top Tips for Home Buyers in a Competitive Market

If you have been looking to buy a home in the suburbs at any point in the past few years and have struck out time after time when putting an offer in, these top tips for buying a home in a competitive market will be very relatable and you are not alone.

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This market has left countless buyers like yourself feeling discouraged and hopeless. While this post won't give you the secret ingredient to have your next offer accepted, I promise you these top tips for home buyers have been proven to win offers for many of my clients. 

Negotiations have virtually been taken out of the transaction, and you are told to make your first offer your 'Best & Final'. But what does that mean? Do you increase your offer price by $5,000? $10,000? More? What else can we do to sweeten our offer? 

I will focus on 3 subsections of your offer to provide tips, advice, and methods I, and many successful agents, use to win their clients their dream home. Spoiler alert - it is not always ALL about the price of your offer. Let's jump into it...


The question I am asked the most by my clients when facing a multiple bid situation is; "What are the other offers and how much are they for?". Here is why that question cannot (usually) be answered; the seller's agent has a fiduciary duty to the seller and seller only. The fact of the matter is that unless the seller gives permission to the listing agent, they aren't allowed nor should they provide any other agent with the price of the other offers.

Well here is where a good agent (like myself) comes into play. Your agent should 100% be introducing themselves, forming a relationship, and selling you as a buyer with the other side the minute that you tell them you love the house. I promise this will pay dividends, and if your agent is not doing this, call me. By forming that relationship, your agent will be able to get more information from them on the strength and terms of other offers than agents who blindly put an offer in. 

From that info that other buyers may not have, we are already a leg up and can form a solid starting point. The next thing I tell my buyers is to talk to each other and figure out a number where, if the property closes for $5K more, you will not lose sleep about it. This is essentially giving you a chance to find what your true top number is, without acting on impulse and offering a price you are not comfortable with. By taking this number and analyzing comparative sales, sub-market trends/stats, and any info we gathered from the listing agent, we can essentially back into an offer price that is not only strong, but that you are comfortable with. 


It is not ALL about price. Let's focus on 4 offer terms that will help yours move to the top of the line. 

#1 - Inspection Contingency

I want to preface by saying unless my client explicitly states and fully understands the implications and risk of waiving inspections, I will never recommend it to anyone. However, there are ways to keep your inspection contingency while staying competitive. Here is an example; Putting a monetary cap on the inspections i.e. 'buyer will cover the first $X amount of repairs/replacement costs, if repairs/replacement costs exceed $X amount, buyers and seller's can choose to negotiate. This allows you to get inspections, but gives the seller peace of mind that you will not be nickel and diming them for miniscule items.

#2 - Appraisal Gap Coverage

When buying a home and taking out a mortgage, the lender will give you the loan based on the lesser of the two - contracted sales price or appraised value of the home. If your contracted sales price is higher than your appraised value, there is a monetary gap known as appraisal shortfall that, in a normal market, would be negotiated between buyer and seller. In today's market, however, offering to cover any appraisal shortfall up to $X amount or in full, will give the seller the satisfaction of knowing that your offer price is what the property will close for no matter what. This shortfall will have to come out of the buyer's pocket as an additional cost at settlement. Depending on how much your down payment is, it can also be covered by lowering your LTV. 

#3 - Initial Deposit or EMD

Your initial deposit, or, 'earnest money deposit', is essentially the buyer's collateral in the transaction. This deposit will be given to the title company upon signing a contract to hold in an escrow account and at closing, applied to your down payment and closing costs (it is not an additional cost). The only way that a buyer will lose this deposit is if they breach the contract (collateral for the seller in the event that happens). With that being said, if you were a seller, and someone wanted to put down a $100 dollar EMD vs. someone putting down a $10,000 EMD, who would you feel more comfortable with? The buyer who is willing to put up a significant amount of money right? That buyer does not want to lose a large sum of money by breaching the contract. By raising your EMD, you can stand out as a buyer who is not only strong, but will not breach the contract without valid reasoning.

#4 - Closing Date

In this competitive landscape, the first thing I ask the listing agent when representing a buyer is, "what is the seller's preferred closing date?" They may want as quick as possible, or, more time if they need it. If you as a buyer have flexibility, the number 1 thing you can do is essentially let the seller pick the closing date. This will stand out against a similar offer that may not have the flexibility you do, or simply didn't ask. 


Top Tips for Home Buyers: YOUR LENDER MATTERS

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Think of your agent and lender as your coaches/teammates. Now, do you want two all-stars or are you okay with having one or both be sub-par? Who you work with matters. It also matters to the listing agent who is advising the seller. Having a local, reputable, and trusted lender will go so far in your deals. If they have worked with the other agent before, done co-op deals with them, or even hop on the phone with them when we put our offer in, I promise your offer will stand out amongst the rest. One of the most common ways a contract terminates is due to inability to close due to financing. Eliminating that possibility by working with someone that is local, available, and vouches for you is huge in choosing your offer. Not to mention local lenders typically have appraisers that are familiar and work in the area of the homes you are looking at, and usually, have less appraisal issues than non-local, large corporation lenders. 

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