We understand how disappointing it can be to miss out on a property due to a bidding war, and are here to say, Hang in there! As for any other competition, it pays to have the right equipment, and stamina is your secret weapon. We wrote about the bidding wars in the spring, and now that the competition has heated up, we offer the following are five options for taking your offer across the finish line.
1. Appraisal contingency
“Should the house appraise at an amount lower than the purchase price, buyer is to pay the difference in cash, up to a maximum amount of $20,000.”
Traditionally, an appraisal contingency was written into a deal to protect a buyer if a home was valued lower than a certain price. A buyer in a tight market, however, can improve the odds of a purchase with an appraisal contingency that offers some peace of mind for the seller, and at the same time caps the risk to the buyer to an amount they are comfortable with. Obviously, the higher the amount the stronger the offer is.
“Buyer agrees to purchase the house as is, aside from any items of fire, life or safety.”
Safety first, of course. With this option, we are not waiving the inspection period, but making it considerably less painless for seller, should more issues than they bargained for arise during a home inspection. This agreement still protects our clients should something major come up in the inspection.
3. Non-refundable earnest money
“Upon accepted offer, buyer will release X amount of earnest money to seller, which will become non-refundable upon acceptance of this offer.”
In a nutshell, non-refundable earnest money locks a buyer in. The big hope for a buyer is that no major issues come up in the inspection and financing sails through, because non-refundable means just that. This is an effective option for the client with a high appetite for risk, and who is financed well enough to take a risk. Which is to say, it is the rare client that utilizes this strategy, but if they can, it can really tip the scales.
4. An offer of more money if offer is accepted by a certain deadline
For example: “Purchase price to be $5,000 more if offer is accepted before Sunday at 8pm.”
This option can be most effective when you are the first offer to the table and want to try to shut it down. Sometimes sellers don’t want the hassle of 30 showings and a bidding war. It’s a good idea to feel out the listing agent on this.
5. Rent back
“Buyer will offer zero cost rent back for up to 30 days after closing. See attached agreement to occupy after closing.”
When filling out Agreement to Occupy After Closing, make sure it requires a security deposit from sellers, and that the seller is required to have the house professionally cleaned upon move-out. This rentback offer cannot exceed 59 days using conventional financing. This option appeals to sellers who may be in a similar position of trying to find, purchase and close on a new home, and could benefit from a little extra time in the home. Not only does it relieve their stress, it makes your offer that much more appealing.
Your Bend Relo agent will walk you through all the ways you can make your offer shine, and help you make the choices that make sense for you.
A sixth tip is about self-care during what can be a rollercoaster of highs and lows: breathe deep, stay positive, and trust your team, and the payoff will be a beautiful home in one of the country’s most desirable places to live.