Congratulations! You’ve found the house of your dreams. Now for the hard part: Convincing the sellers to accept your offer. That’s especially tough in today’s market, where tight inventory often leads to bidding wars. Nearly one in five homes sold for more than its list price in February 2017, according to Redfin, and that’s before the spring selling season really heated up.
With all of this competition, how does anyone negotiate buying a house? You can still close the deal, but you’ll need to be competitive. Follow these home buying strategies to stand out from the pack.
How to Bid on a House and Win
1. Get pre-approved.
Whether you’re applying for your first home mortgage or you’ve bought a home before, getting pre-approved is a smart move. In today’s competitive market, sellers don’t want to waste time negotiating house prices with potential buyers who haven’t already shown that they’ll be able to get a mortgage. “[Being pre-approved] is a sign that you’re prepared to buy and close quickly,” says Trulia spokeswoman Lynnette Bruno.
“Moreover, being pre-approved for a mortgage will also set your own expectations on how much house you can really afford.”
2. Be flexible.
If your seller is unsure of his timetable, providing flexibility around the close or move-in day can go a long way. In particular, sellers who are attempting to time the purchase of their next home to coincide with this sale may place a high value on being able to control the calendar on at least one of the transactions.
3. Write a personal letter…
While buying and selling a home is a business transaction, there are lots of emotions involved as well. “I recommend that my buyers include a handwritten letter to the seller with the offer explaining why they like the property, and what they plan to do with it,” says Beverly Hills-based Realtor Scott Tamkin.
If your offer is worth significantly less than another one on the table, the letter won’t change much. However, if two offers are fairly similar, a heartfelt letter just might give you the edge.
4. … But don’t let your emotions guide your decisions.
It’s easy to get caught up in negotiating the house price, especially when you love a house. Determine ahead of time what your top-line number is, and don’t go past it. “If you don’t get that one, it means that there’s a better one around the corner,” says Bruce Ailion, a Realtor and attorney at Re/Max Town and Country in Atlanta.
“Sometimes winning negotiations means losing the house, but not overpaying.”
5. Know your down payment limits.
Cash is king, and putting down a larger deposit or down payment is a great home buying strategy. Review your finances to understand the highest down payment you can comfortably offer, and be ready to move forward with that.