According to real estate data crunching site Redfin, realtors are predicting an especially competitive home-buying market this year, as active markets face lower house inventories for the spring season.
What should you do if you find your dream home, only to be drawn into a bidding war? Redfin scrutinized thousands of offers written by its realtors last year to see which techniques won the day. Not surprisingly, these top picks jibe with advice dispensed by other real estate sources, too.
Here are the top winning methods, but be warned: some of these require a strong stomach, as well as a fat wallet.
This is the hands-down winner, of course – and isn't something everyone will be able to propose. If you can afford to, however, you will be wise to do so. Redfin found that cash offers made sellers 28% more likely to take an offer.
What if you can't offer cash? Get pre-approved for a loan, and be certain that your lender will provide you with an approval letter for a particular property on a moment's notice, suggests Bankrate.com, noting that this is the next best thing to a cash offer.
Pre-inspect the property
Having a house inspection done ahead of an offer can be a great strategy, since it can put the seller's mind at ease about you canceling the deal on the strength of a sub-par report. This tactic increased the chances of an accepted offer by 21%, according to Redfin. Alternately, you can waive the right to an inspection altogether – which could wind up being a more expensive proposition than paying for an inspection on a house that you lose to another bidder.
Bankrate suggests a sneaky way to ameliorate this risk: bring your home inspector along when you look at a house, keeping him incognito. Not only can he be giving the place a quick visual once-over, but you'll have him right there in case you want to make an offer that day.
Waive financing and/or appraisal contingencies
This is a no-brainer if you are offering cash, but can be more tricky when that is not the case. If you feel comfortable making up the difference if the appraised value is too low, that's fine – but know that it will come out of your own pocket. A bigger-than-usual down payment may help here, as well as make you look more attractive as a buyer.
Submit a sentimental letter of introduction with your offer
This one works less well than the other strategies, but still was responsible for increasing the odds of a win by 9%. Telling sellers how much you will cherish their home can work wonders, particularly if it is accompanied by pledges of flexibility on other terms, such as a closing date – in addition to, no doubt, a high bid.
You may not be able to use all of these techniques, and, if you are a cash buyer, you probably won't need them, anyway. But, for the average homebuyer, knowing how to put yourself in a more favorable light during negotiations could mean the difference between winning and losing the home you covet.