Searching for your dream home in a demanding market? Try these creative options to help you stand out over a competitive bid.
Who buys a house during a pandemic? As it turns out, EVERYONE! The low-interest rates combined with the economic impact payments have saved the housing market from a downturn and created a large demand for homes. The rules of economics are basic supply and demand. When demand is high, and the supply is low, the probability of overpaying increases. The low interest rates combined with economic impact payments have created a significant housing demand. When there are more buyers than sellers, we call it a seller’s market.
In a seller’s market, it’s normal for more than one family to make an offer to buy a home, which creates a competitive bid situation. When a potential homeowner finds the perfect house within their budget in a seller’s market, the first instinct is to offer more money. However, you can incorporate creative low/no-cost options into your offer that may help you avoid becoming house poor.
Flexible Closing Date
Since no one can know the seller’s needs or why they’re selling their home, letting the seller move quickly or close later could make moving more convenient for the seller, in turn, making your offer more attractive. Recently, this won a contract in a multiple bid situation because the seller was commuting to a new job almost two hours from home and wanted to move as soon as possible. In this case, they chose the offer that was less money but the buyer that could close on the same day as the seller with their new home.
Make Repairs Yourself
If the listing says the seller must have something replaced, repaired, or cleaned, you can save the seller time and money by offering to do this yourself instead. There’s a massive upside to this option — you as the buyer will get to choose the improvements to the home and who does the work. Another win will be the aesthetic will be what YOU envision for your new home instead of the easiest option.
Pay For Some Of The Seller’s Closing Costs
Buyers are required to pay between 2-5% of the home’s purchase price in closing costs; however, the seller will also have closing costs to pay. It’s likely the seller is buying a new home as well and will have their own closing costs to pay. A creative alternative to offering more than the asking price is to offer to pay a portion of the seller’s closing costs.
Pay Moving Expenses
The seller will be moving out as you as the new owners are moving in, so offering to pay some or all of the seller’s moving expenses could help sweeten your offer. However, add a cap to the expenses to avoid overspending your budget.
Overnight Any Mail Or Packages
Though most types of mail can be forwarded, some types of mail aren’t eligible for mail forwarding. If one of the seller’s orders is delayed or the change of address has expired, offering to send the seller their mail or packages after they move could be helpful. Remember, you will need to ensure you can pay for the overnight shipping fees since they are more than regular mail. This option will allow you to pay this expense over time instead of at closing.
These small but impactful options are less expensive than overpaying for a home. However, if most people in your area are offering much more than the asking price, adjusting your home buying expectations is still an option. Overspending on your home budget may make the new home feel more like a cage, but careful planning can avoid this and allow you to celebrate your purchase.