You’ve done your homework and researched schools, neighborhoods, and amenities. Your credit is in good condition, and you’ve been preapproved for a home loan. Now, you’re ready to dive into buying your first house! Once you’ve found your dream home, you’ll want to put in a good offer. But since this is your first home, you’re not exactly sure what that looks like.
Here are some tips on how to place a competitive offer that gets accepted and allows you to make your first home purchase.
Tips for Making a Competitive Offer on Your First House
Right now, there’s a shortage of homes for sale on the market, which means that competition is high. In some places, the shortage in supply has resulted in serious bidding wars. If you’re a first-time buyer, it’s important to know what kind of market you’re getting into and prepare accordingly.
Buying your first house in today’s market is possible, but it will require some effort on your part. You’ll want to do everything you can to prepare yourself for the endeavor ahead, which includes knowing how to make a good offer on a home you’re interested in.
Here are some tips you can use to make sure your offer is competitive and stands out from the rest.
Tip #1: Get preapproved
If you haven’t already gotten preapproved by a lender, you should do so immediately. A preapproval letter confirms that you will be able to obtain the necessary funds to purchase a home. If you don’t include one with your offer, your chances of being able to buy the home you want drop significantly.
Tip #2: Avoid unnecessary contingencies
If you feel comfortable doing so, you may want to consider waiving unnecessary contingencies to make your offer seem more appealing. Contingencies like a home inspection contingency and appraisal contingency are set in place to protect the buyer. But some sellers may see them as a nuisance. If they’re looking to sell their home fast, then they’re likely to pick the offer with the fewest contingencies.
Tip #3: Increase earnest money
Earnest money is money that a buyer pays as a deposit on a home. Earnest money tells the seller that the buyer is serious. Additionally, it also helps protect the seller. If a buyer backs out of a contract without a good reason, they’ll end up losing their earnest money. To show a seller that you’re serious about purchasing their home, consider offering more earnest money.
Tip #4: Include an escalation clause
An escalation clause is a section in a home purchase contract that tells the seller that the buyer is willing to raise their offer on a home if someone else puts in a higher bid. This part of the contract explains exactly how much more money the buyer is willing to pay than the highest offer as well as their spending limit.
Get Advice from an Expert
For more advice on how to make a competitive offer when buying your first house, talk to one of our mortgage specialists. We’ll be happy to share any tips, information, and resources we have available for first-time buyers.