It is no secret that housing inventory is scarce across the desert, and the rest of Southern California. The thin availability of homes for sale coupled with strong demand to live in the Greater Palm Springs Area has created intense competition most homebuyers are feeling when searching for their next property. This bottleneck is causing a market environment where multiple offer situations are common.
To aid your homebuying experience, here are some tactics you can deploy to help strengthen your offer when a seller is considering multiple bids. Please note that the strategies below are common ideas you can use when discussing your needs with a REALTOR®. For personalized advice about your specific situation, please consult with a Bennion Deville Homes real estate professional.
First, consider paying for some of the costs associated with purchasing a home. Traditional line items covered by the seller include home warranty, natural hazard disclosure, termite report, the county transfer fee, or even some of the closing costs. These costs can add up, so offering to pay for some of them will strengthen your offer by creating a greater net return for the seller without impacting the final purchase price of the home.
Second, consider shortening the timeline for transaction milestones like inspections and loan contingencies. Going from a 17-day inspection period to 5, 7, or 10 days, or reducing loan contingency to 17 days, shaves off precious time and allows the seller to not lose out on market time should things fall through. Of course, make sure that you are comfortable with this approach and can line up the details to ensure shorter timeframes are feasible before making the offer.
Third, consider including a price escalation addendum with your offer. This tool allows you to put in an offer with a statement that you are willing to go from X price to Y price if you are outbid. This is a complicated contract instrument so be sure that you fully understand how it works by speaking to your REALTOR® and having them explain your options.
Fourth, your offer may stand out if you are willing to put down a larger earnest money deposit, come in with a lower loan to value (larger down payment), and/or purchase the property “as-is” by not asking for repairs. Putting down more money up front in the form of an earnest money deposit shows you are serious about the property and are willing to back it up with more cash up front. Additionally, if you can afford to put more money down toward the house and take out a smaller loan, your offer can stand out because the seller knows you have a better chance at closing. Finally, requests for repairs can hamstring a deal and create longer closing times, not to mention pass on greater costs to the seller. If you are willing to forego these requests and handle any repairs on your own after close of escrow, your offer may appeal to a seller who is looking to close in a shorter timeframe and without the financial bite to their closing proceeds.
Fifth, if your timeline is flexible, offer the seller a Residential Lease After Sale or Seller Possession After Closing (SIP). This establishes a set period to allow the seller time to find and move into a new property. This added flexibility granted to the seller can alleviate stress on their own situation and may make your offer more attractive. Time is a commodity we cannot get back, so providing it to a seller who may be feeling the same crunch of finding a suitable property to purchase plus time for packing and moving could be the difference between acceptance and considering other offers on their home.
Finally, if you are going to be purchasing the home with a mortgage, be sure that you are including a pre-approval letter for your loan, not a pre-qualification letter. A pre-approval letter indicates to the seller that you are good for the funds as verified by the financial institution backing your loan and should be able to close on the transaction. Also, be sure to have a Verification of Funds Statement ready so you can show that you have enough liquid cash for closing costs and a down payment on the property. Any information you can provide to the sellers to demonstrate that you will be able to close on the home without any financial hang-ups will help you stand out as it’s one less pitfall that can occur during the closing process.
We are here for you to discuss your options and to help you make the right decision for your current and future needs. To find the Bennion Deville Homes office nearest you or to search by agent, visit our website BDHomes.com. We will unlock possibilities for you.