How to Make Your Offer Stand Out in a Seller’s Market

No, it’s not your imagination: there are fewer homes to buy and more and more buyers flooding the real estate market across the United States. If you haven’t heard the term “seller’s market,” it describes perfectly what you’re likely experiencing today. With fewer homes listed and more buyers interested in hot markets like Denver and surrounding areas, you’re more likely to find yourself in a bidding war. Finding a property that you love that fits your budget is hard enough without worrying about your offer being accepted, too. So how do you make your offer stand out?

Luckily, there are a few ways you can work with your Loan Officer to strengthen your offer and hopefully walk away with keys in hand:

1. Consider offering an “appraisal gap” payment.

Arguably the most common strategy in a low inventory market, an “appraisal gap” payment is a surefire way to strengthen your offer. In this situation, your offer has come in higher than the appraised value of the home, which is extremely common in competitive markets. Thus, the “appraisal gap” is defined as the difference between the appraised value and offer amount. Unfortunately, an appraisal gap can cause some friction during the closing process.

By agreeing to pay all or part of the “appraisal gap,” out of pocket, you provide an insurance policy against potential issues during closing. These funds are considered an additional closing cost rather than a down payment to avoid impacting your loan.

If you have the funds on hand, this is certainly one of the easiest ways to give a seller confidence in your offer. There’s no such thing as a silver bullet, but this may help your chances of landing your dream home.

      2. Consider covering the seller’s title fees.

Traditionally, sellers and buyers split all title fees between the two parties. Of course, this market is not “traditional,” so you may consider offering to pay 100% of the title fees instead. This is a more costeffective approach than the appraisal gap, but still a fantastic gesture and potential difference maker in the offer process.

      3. Forfeit your right to take back your earnest money.

If you’re new to real estate transactions, “earnest money” is a sum of cash put into an escrow account after your offer is accepted. Eventually, this money is put towards your full payment so isn’t “extra” on top of what you’re already paying. Rather, an earnest deposit shows that you are serious about closing and gives the seller an insurance policy should you back out.

Traditionally, if the inspection fails or something goes awry on the seller’s side, that money is returned to the buyer and both parties move on. But as a gesture of good faith, you might offer to waive the ability to take back your earnest deposit. There is risk involved here and you must be willing to accept the consequences should the closing process hit a bump in the road.

You absolutely should have a fully-underwritten loan approval before including this in your offer — not just a pre-qualification. This certainly will lessen the risk involved, but not eliminate it completely.

Should everything go smoothly, everyone wins. Your seller gets an extra reason to trust your offer, and you get a better chance at winning the bidding war.

      4. Give the seller extra time to relocate.

Remember: in today’s seller’s market, it’s just as hard on sellers to relocate as it is on you to purchase! As a result, more and more sellers are transacting before purchasing their new homes. This opens up a great opportunity for you to strengthen your offer without the financial obligation of some of the other ideas on this list.

By allowing them to occupy the home for a set period after you’ve taken ownership, you give them time find a home. If you’re in no rush to move, this might be the perfect gesture to put your offer above the rest.

      5. Offer up a quick close.

A standard close time is roughly 30 days, but due to demand and operational overload, some bigger banks are taking up to 45 days or more. Luckily, private banks like Sun West typically have the ability to offer what’s called a “quick close” of 21 days or less. For sellers who need to transact as quickly as possible, this could be a game changer. If you’re working with a private bank, it’s worth speaking with your Loan Officer to see if this is an option for you.

      6. Consider waiving or limiting inspection contingencies.

This one’s making the headlines — and not in a good way. There are plenty of stories hitting the news about buyer’s negligence with more and more buyers waiving all contingencies. Let us preface this by saying inspections are essential and can unveil serious issues that could drain your finances down the road. However, by limiting certain inspections, you can give the seller peace-of-mind that you don’t plan to nit-pick small damages in the home. In this case, you’re simply assuring the seller that you won’t ask them to pay for anything that is not a serious health or safety concern. Your Realtor should be able to help you word this properly, while protecting you in the process.

      7. Last, but not least, remove all loan contingencies.

One of the best things you can do to improve your offer is provide a fully reviewed and underwritten approval from your mortgage company. Sun West, for example, offers a TRU Approval to customers, which involves your loan being fully reviewed and conditioned by an underwriter before you even submit your offer. This is a lot more appealing to a seller than a traditional pre-qualification that has not been reviewed by an underwriter and could have conditions tacked on later.

With many offers on the table, the promise of a smooth closing process could be what pushes your offer above the rest. This is not offered by all lenders, so be sure to speak with your Loan Officer about approval options.

The Bottomline

Perhaps the most important takeaway in this article is how much your lender can help you
strengthen your offer. By selecting a lender that is responsive and flexible, you are adding a key
player to your team in finding and purchasing the property of your dreams. Don’t hesitate to
call up your lender and ask for their assistance in the home buying process — and a good lender will do whatever they can to get those keys in your hands in no time.