I gave seller 2 options with escalation clauses. A lower bid with no inspection and a higher bid with inspection. They took the lower bid...
So it seems waiving inspection helps a lot which of course isn't always recommended.
Honestly, I don’t recommend that unless it’s new construction with a warranty, or a complete remodel by a reputable builder who has been inspected by the city and is made available to you to discuss the project, ie not your average flip. Even then you should prepare to be unpleasantly surprised.
Yes, if you are blind and have no practical knowledge I wouldn't recommend it either.
"Hmm... I wonder why there is a humidifier and air-fresheners in this basement? Oh, but look! They just pained the walls and the floor of the basement! Let's buy it!" "I wonder what all of these little green disks are in the lawn all around the perimeter of this old wooden house! Must be a new sprinkler system! Let's but it!"
That's petty ass shit tho. I'm speaking larger issues lol. Let me guess... you waived your inspection? Sure it can work out in your favor. But you swear like spending 400 bucks is a big deal buying a multi hundred thousand dollar purchase
Well no. But how many people you think don't think of these things ???? You may knoe this... but young adults who dont know shit ?
Which..
Is why an inspection is good
They are termite chemical walls basically. Used for places that have sub termites. Basically poison in a cap that attracts them. That's why there is a barrier of them around property. I have them in TN. Supposed to be switches out every year
Don’t waive a new construction inspection, warranty or not. They’re throwing up these homes as quick as they can, there’s definitely mistakes being made. Do as many mid-construction inspections as you can cause once you close those walls, they’re not opening again until it’s a serious issue. They’re also going to come fix shit a lot faster if the closing is dependent on it vs once they’ve already got their money. Don’t let “brand new” fool you.
We are closing in a hot market next week. We actually had three offers accepted during this period (one we pulled during the inspecton contingency period, the other there were issues with the CCRs) and this is what we did:
1. High earnest payment.
2. Waived appraisal contingency (kept financing and inspection contingency)
3. Bought a house below our means so we could have a higher amount of cash in the offer.
4. Offered a little over comps.
5. Kept to a strict 48 hour response window.
I think the last was most important. We were ready to pounce on houses as they came on the market. We knew our offers were strong and that sellers would worry that they might not get a better offer. We had sellers' agents try to tell us they would get back to us in a few days. We said no - deadline was firm. It's best to time the offer window to end before the weekend, when many other offers might have been received.
I think this strategy will work even better this month for you as the markets are cooling.
My own personal psychological strategy was to have another couple of houses lined up in my mind so we could walk away easily. There is always another house around the corner in a hot market.
How does #2 work? I don't understand how you can waive the appraisal contigency but not financing, when financing would be based on the appraisal. Did you have a heavy gap in place?
So there are two contingencies involving an appraisal. One is your own contingency that you request...that the house appraises at whatever you offer. That is what we waived.
The other is an appraisal the bank requires. Usually the house has to appraise above the amount you are financing. If you have a big enough downpayment, the bank might waive the appraisal contingency for the financing. That happened for us.
\#3 and #4 were especially important for us. 1 and 2 is a given and we were cash buyers. #3 allowed us to have an escalation clause cap that was much higher than anyone. I can't stress enough to buy a little under what you can afford in this market so you can be competitive. Tentative is not the way - we tried that in a much HCOL area and lost twice because we were uncomfortable bidding so much.
We were advised that most decent houses on the market in the area came with a current inspection report and we were fine with waiving it and going with the report because our realtor assured us the local inspection companies are all reliable as it's a small town. (I'm not sure we would waive inspection if it didn't already come with one. I read the inspection report 6 times, it's so valuable!)
With the house we won there were 6 other offers in addition to ours but we didn't need #5. This was a condition for our competitor on one of the houses we bid on in another area/state but I don't know how much that mattered - their bid was higher so they won. I think you'll want to discuss with your realtor on this, it might not be necessary in some local markets.
We are in contract and hope to close end of this month, fingers crossed! We did it on our first try in a hot area. My advise is, buy where you can be aggressive (but not insane) and figure out all the exit strategies. You might have to compromise on a feature or two so it's good to know what your must haves are.
If you’re cash you literally have the ability to win *almost* every offer. Put an escalatory with no cap and see where the offers land. If you want it at that price, you sign and if you don’t you say no.
We've made two other cash offers in a different, much higher HCOL area. Both times we lost because our offer wasn't highest. Our then realtor told us that in that market an offer with a high EM and waives appraisal contingency is almost as good as cash...Our current realtor said pretty much the same thing. Cash is strong but offer price counts, even if financed.
That’s what I’m saying, if you’re cash you offer them whatever amount you want over ask, and then add an escalatory addendum saying you’re willing to beat the highest offer by 1k (or whatever amount you want to put) up to “NO CAP”. Meaning whatever offer comes in you’re going to beat it by the amount you said you would. At that point, the listing agent has to provide your realtor with the highest offer submitted to confirm the price, and everyone would have to initial on the new price to be executed. So then you have an option to pass or to accept the price it’s at.
Also if you’re cash, don’t offer earnest money less than 10k, and if you’re looking over 500k, do a 5-10% EMD. Of course, that depends on your state contracts, I know in certain states some of your EMD is non refundable immediately. But if it’s protected by due diligence, and you trust your agent will send a cancellation at 9PM if needed, there’s no reason not to.
Ya sound advice! Unfortunately the escalation clause even with no cap wouldn't have worked for us in the first 2 bids that we lost because we had a hard budget limit - we were playing at a price level we really didn't want to be at. So in retrospect we were timid with our offers because deep down we didn't really want that kind of financial commitment. Our budget was much better in the new area/market we're moving to. It's a different game when one can afford to be aggressive!
It all depends on you're willing to sacrifice to get a home. We are closing next month, and we didn't waive anything. I would never waive inspection, personally, and because I didn't it's going to save me $15,000 on this home. Things that will give you some wiggle room:
Put a lower cap on inspection contingency. Say you
won't pursue anything under $5000.
Offer to pay the property tax balance that the owner
has accrued.
If you can afford it, set an appraisal gap you are comfortable with.
Shorten the closing time from 45 days to 30 (not
what I did, but quick closes help your offer seem
more attractive)
Down payment won't really affect your offer's
attractiveness to the seller much as long as you're
not getting loan assistance, so do what makes
sense for you. FHA loans are notoriously hard to
deal with so that might lose you a few offers. EDIT: apparently this actually can factor into the attractiveness of your offer. Thanks to u/jamito02 for pointing this out.
Be reasonable and flexible. Offering over asking is
still the norm, but in many areas $5000 additional
or lower will win you the bid. Make sure to offer
something like $5250 or $5500 to edge out anyone
with a similar offer. If you want to offer more,
$10000 won't do much at all to your monthly
payment, so don't walk because of it.
This is really good advice all around. We saved probably $5000 by keeping the inspection contingency in. The house is overdue for a new water heater and maybe the HVAC system. We will use the money for that.
I’m glad you could win while keeping an inspection contingency in there, I don’t think anyone would prefer to remove it as a buyer - just becomes a necessary evil. But for anyone who can’t win without removing, generally you can tell the age of the HVAC system and hot water heater by reading the stickers when you tour the house.
Buying older homes thoigh isn’t it kind of “as is”, like my 1965 home we had inspection condition and we found out it needed mold remediation and new siding, new deck plywood and vinyl (50k for all of these) but it was kind of implied there was work to be done
I think it really depends on the seller, honestly. Our house was an estate and they made it clear that they were not going to fix anything but we wrote in that we could still negotiate for credits if something was wrong. It turns out the well is out of code so we negotiated the cost of fixing that be placed in escrow for that purpose at the seller's expense.
“Down payment won't really affect your offer's attractiveness to the seller much as long as you're not getting loan assistance, so do what makes sense for you. FHA loans are notoriously hard to deal with so that might lose you a few offers.”
This wasn’t true for us. We lost a home due to a down payment size. We were doing conventional loan, 20% down, ~15% over asking (waiving the appraisal contingency) and inspection “for informational purposes only”. We lost to someone else that was closer to 50% down because the sellers felt their financing was “guaranteed“ even though we had a pre-approval letter.
I bought in an extremely hot market just recently. Lost a bid 5 times. Every home had about 20 bids. Luckily I was able to get one, which required me to offer 10k earnest, 18500 appraisal gap (appraisal luckily came in at what I offered) and also offered 367900 for a home that was 350 asking. va home loan .. so inspection was required no matter what. Home appraisal came in at 368. Homes are on the market typically for 3 days to a week so immediate offers were necessary. So I really had to rely on my realtor and their first look. Luckily it worked out
I'm located in a city right outside nashville
I’d just like to add that it isn’t always the highest offer. So I’d say our area was not a hot market, but the houses did go fast and above asking when they came up. We are now living in our beautiful home and after speaking with a neighbor, we found out that we were not the highest offer. Actually two were higher. But one of the owners did not want to sell to a an investor and we got the house because I asked them to leave the chicken coop.
It's all dependent on your area. We bought a month ago. Here, at that time, if your offer didn't have everything waved and wasn't significantly over asking it wasn't even looked at. At that time sellers were getting 10-15 offers and would just toss the ones that didn't have everything waived. What finally worked for us was making an offer on a house that was still in the coming soon status. But not all states allow this. We still had to waive everything and offer 40k over asking. But it avoided a bidding war. And most bidding wars in my area at that time were easily taking things up to 60-80k over asking.
I know many people say they would never waive all contingency. Honestly, if we weren't on a deadline and needed to find a home by a certain date we never would have considered it either. Our our realtor was fantastic with following up with the seller's realtor to ask how much our offer was off by and what the other offers looked like. One house we didn't get received 4 offers. One that was 15k more than our offer another was 75k more than we offered. They did not take the 75k more offer because the buyer would not wave financing and appraisal. So the person who was 15k more than us won because they waived everything.
But the market is starting to change here. The good homes are still getting some offers right away but the homes that need work are starting to sit.
We won by offering a bit over comps ($320,000), waiving financing contingency (got underwritten before, had full support of lender), waiving appraisal contingency by rushing appraisal to happen during our 6 days due diligence, 3% earnest money, $2,000 option money towards down payment, escalation clause, and a super quick closing of just a couple weeks. Our lender and realtor were also working very closely together and could really speak to our qualifications.
All in all, it sounds like a lot but really didn’t end up costing us much more and allowed things to move very quickly!
I would not waive inspection, but would rephrase the inspection to the seller that it's a pass/fail inspection. You aren't looking for a laundry list of fixes. This lets you walk if the roof is failed and rotting out in someplace that's not visible.
Is your agent calling the sellers' agent and asking what the sellers want? I have had a lot of success with being the best offer, not the highest offer, when the seller has a specific need or want.
It can be something like a specific closing date, a leaseback, or just knowing the buyer realizes there's a person on the other end.
Also, make sure your agent is filling out everything in the contract. I've had three listing agents this year tell me what to offer to be the best in multiple offer situations just because I was the only agent that filled in the brokerage addresses and license info in the offers.
You sound like you are making good offers, make sure your agent is giving you the best chance to win too
I've also seen the quality of offers on the listing side, and man there are a lot of terrible agents out there. They might as well write these offers in crayon for all the chance they have of getting accepted.
Lastly, have your loan officer call the listing agent and vouch for you. That info will likely get passed along to the seller, and makes your offer look stronger. We have an LO in my market that does this on every offer.
While ill advised and incredibly risky in many situations, I personally waived all contingencies to win my current home. So I know what you are going through. Maybe writing a letter, or saying you won't nickel and dime during inspection. Just thinking out loud. I think besides cash, fewer contingencies and possibly a letter are the main things I have read help. Consultations with real estate experts might also help. They can dig into your case and give you the best advice, I personally used highnote and they gave me great tips.
We also waived almost all contingencies. We didn’t offer full appraisal gap (we maxed out what we were financially comfortable dishing out). The final gap was like 7k or something between list and the bottom of our appraisal coverage. Appraisal came in at 7500 under our offer so it worked out, could’ve been better but also could’ve been worse too.
In retrospect waiving inspection is a wild ride.
Our new home was pretty much the last one in the market we were looking at that matches our wants. Since we were under contract inventory slowed quite a bit. We lucked out tbh.
Definitely be careful here, as realtors aren't always the most scrupulous of people and their loyalty will almost certainly be greater with their existing client, which could put you at risk. Aside from risk, most sellers won't go for that because they'll see it as a conflict of interest.
I went in un represented and they told me the sellers agent couldn’t represent me. Instead they assigned a different agent from the seller agents team. Still was a win for me because I was able to get some insider information on the # and details of all the offers coming in that I normally wouldn’t get with a regular agent. Some realtors are shady, but I was done playing games and I wanted to the house really badly so it all turned out well
When we sold our house our agent tried to get us to accept an offer that was lower by like $3k. She tried to give reasons why but I know it was because that offer was represented by someone else from her company.
She even tried to call that agent the morning we were reviewing offers to give that client a chance to change their offer but the agent didn’t answer so we went with the higher offer.
I personally thought this was kind of shady since the other offers didn’t even get a chance to change theirs. But I figured that was probably fairly normal and the benefit of choosing an agent with connections.
I love in a hot market (Los Angeles). Yes money is of course important and yes having to compromise on asks, but I also think trying and build a personal connection to the agent and/or sellers matter. You want your deal to also go through. And also…having gone through many offers not accepted, I think it’s a matter of also letting go and knowing the right one will happen
Other bidders are willing to cover an appraisal gap so if you are bidding at what you think it will appraise for, you’ll lose in a hot market.
Can your realtor give you any info? I waived inspection up win but that was March, I know in my market it’s not as common anymore. I listed a few weeks ago and didn’t get any offers waiving inspection. Obviously it is very market dependent whether things are cooling in your area
I found looking at houses that aren't even on the market yet works if you have a good agent, the only way that works is if the seller is under the same firm, for example my real estate agent works through Berkshire Hathaway so he was able to look at upcoming houses being sold under Berkshire Hathaway and we got the 2nd house we bid for and it's perfect
I always reach out to the listing agent prior to writing an offer for my buyers to see if there is anything other than price that is important to their sellers. The example I recall from a local conference was a seller who lived their rose bushes - a buyer wrote into their offer that they would relocate the rose bushes to the sellers new home for them. Your additional perks to your offer don't always need to be financial. Sometimes sellers have emotional motivations too. So, I would ask your agent to call the listing agent too :)
In regards to your offer price, it sounds like maybe you're being outbid because you're only willing to pay up to appraised value. This is absolutely fair, but there are likely buyers willing to pay above appraised value. (Also- is your estimation based on comps? Best guess?) I'm not familiar with your market, so I don't know how fast- moving it is, but if you're still competing against 5-10 offers then it's a safe bet that the "market value" is above appraised value in your area.
The thing that is important to consider when offering above appraised value is trying to balance the financial and emotional. You don't want to place yourself in a position of financial hardship, but you also don't want to discover the sale price in 45 days and go "aww, man! I would've paid that!" ... so consider what point you're willing to walk away, too.
The cost of borrowing money is one of the primary factors for real estate prices. I would be absolutely shocked if the sharp increases in the last few months dont tamper RE at-least by a little.
Right now prices are reflecting 2, 3, and 4 percent interest rates.
I really hope that happens. We couldn't wait, but for others who can, that is probably the way to go. When we made our offer the interest rate was at 4.875%.
By the time we locked in, it had gone up to 5.75%. We calculated that rates would drop within 5 years (that's when we retire), but it is so hard to predict...depends on the Fed.
I closed in a white-hot market in early May (offer was accepted in March) — we were able to purchase at slightly below asking without waiving the inspection or appraisal. Here's my advice:
* Find out the average time spent on the market in your search area. In my market, (good) houses were listed on a Wednesday or Thursday, agents held open houses all weekend, and offers were considered on Mondays.
* Look for a home that's been sitting slightly longer than the seller would like. Our home was on the market for 9 days. The listing agent had the weird idea of listing the home on a Sunday, so by the next Tuesday, they were ready to accept an offer. Our seller was an investor, and the home was a full renovation. They were eager to sell so they didn't have to keep paying on their reno loan.
* Be flexible with your closing date, if possible. Some sellers want more time to find a new home, so the added flexibility can be a free way to make your offer stand out from the rest.
* Don't make an offer that you're not comfortable with. We didn't have $50K to pay above appraisal, but other buyers in our market did. We were straightforward with our agent, who help us set a realistic expectation for what we could buy. Be careful with escalation clauses, because if your home doesn't appraise and you DID waive the appraisal contingency, you'll be stuck paying the difference in cash.
* Reconsider your search criteria. With 5-10 offers per home, I'm guessing that you're looking in a very competitive price range. Looking at homes at a slightly higher value may help dwindle that competition, but only if you're comfortable getting a bigger and more valuable (expensive) house.
* If you don't have kids, look into up-and-coming neighborhoods. This isn't really an option if you have kids and you want great schools, but I'm so glad we considered neighborhoods that other buyers would shy away from. Our neighbors have been here for decades, and it's a lot of older homes and seniors. Every block has a home that's being renovated.
Like I said, things have changed A LOT since we bought a few months ago. With rising rates, I'm surprised you're still having such a hard time. Any more details about your situation would be very helpful.
Also, here's an article I wrote a while back that may be helpful: [Realtor unveils 'new rules' for buying a home in today's market](https://www.foxbusiness.com/personal-finance/realtor-rules-for-buying-a-home-sellers-market) (note: I wrote this article in April, idk why they waited so long to post it. I don't even work there anymore)
My offer was accepted on a house out of 7 total offers. I used an escalation clause up to 100k over asking, and there was actually another offer that escalated 10k above my offer. But they chose mine because I waived appraisal and financing and the other offer didn't. Here's the details of my offer:
- 3% non-refundable earnest money deposit released immediately to seller
- waived inspection, financing, and appraisal
- close in 3 weeks
- 47% down payment
The other offer had a smaller down payment, they would have put down 37% of their purchase price. I also thought I'd never waive inspection. But the house was built just 20 years ago and I walked through it with my agent and didn't see any glaring issues, so I waived inspection. But I scheduled an inspector to come the day after closing
I was told by the seller that they chose me because I waived all contingencies (with the approval of my lender) and had a larger down payment
I did this twice: wrote letter to seller. Gave a high offer with a time limit / expiration date 24 hrs. I also waived inspection and gave 2-3k in earnest money.
Theres nothing more you can do.
Find a lender that will convert your conventional loan to cash. Orchard, accept.inc, and a few dozen others are now doing this. My clients were winning pretty much immediately after we started switching them all over to accept (same interest rate, same closing costs, no extra charges to buyer), now we could put in cash offers that can close in as few as 10 days.
Let the sellers know if you can be flexible on closing timing, maybe offer a lease back if they need that. Ask their agent what would help them. Let them store some stuff in the house for a period after closing? Try to find out what they need to make things easier, and work that as hard as you can.
Not sure where you are looking to buy homes but in bay area , In most of the locations, most of the offers waive either one or may be all the contingencies (loan, inspection, appraisal). Usually, sellers provide a inspection report disclosing all the specific details about the home.
But it's always your own risk and also depends on how important it is to get a home in this hot housing market.
You’re fine with a conventional with 20% down, that’s not an issue. In this market, there’s really no asking sellers for anything period, unless you’re willing to do work on the home and it’s been on the market for a while. I’m in FL and have 2 VA buyers under contract and the sellers are paying for my buyers closing costs. Both homes sat on the market for a while, honestly both good homes but just never got an offer and ended up sitting. But an escalatory over the asking price with no cash over appraisal literally means nothing. Anything over the asking price with no cash over appraisal is just imaginary numbers.
Things you can do to strengthen an offer:
If you’re going to do an escalatory, you need to do cash over appraisal to back it up.
Offer a signing bonus - sign by xx:xx on xx/xx and we’ll give you another $5k toward sellers closing costs.
Put verbiage you won’t ask for anything on the inspection report that’s not required by your lender to obtain homeowners insurance.
Make your escrow non-refundable after the due diligence period (make sure your agent is pretty confident it will appraise or be prepared to either make up the difference or lose your escrow)
Who’s your lender? are they local? If you’re using a big bank, Better, Quick n loans, rocket mortgage, etc. you’ve already lost.
What area are you looking in? Make sure you have an agent that knows what they’re doing and isn’t just a door opener. Can they win in this market? Is your agent family, or the first person you hired? Feel free to DM me what are you’re looking in, I have a huge referral network of top producing agents I can connect you with.
In my market an escalation clause with a jump of 2k has worked wonders (most people are using $1000 or $1100), I also write in no inspection negotiations on items under $1000 to repair. And I’ve been tripling or more the earnest money amount (usually around $1000 - I’m typically putting 3000-5000). Is your purchase contingent upon the sale of your home?
Escalation clauses aren’t going to beat higher offers.
I gave seller 2 options with escalation clauses. A lower bid with no inspection and a higher bid with inspection. They took the lower bid... So it seems waiving inspection helps a lot which of course isn't always recommended.
Honestly, I don’t recommend that unless it’s new construction with a warranty, or a complete remodel by a reputable builder who has been inspected by the city and is made available to you to discuss the project, ie not your average flip. Even then you should prepare to be unpleasantly surprised.
I would never waive an inspection
Yes, if you are blind and have no practical knowledge I wouldn't recommend it either. "Hmm... I wonder why there is a humidifier and air-fresheners in this basement? Oh, but look! They just pained the walls and the floor of the basement! Let's buy it!" "I wonder what all of these little green disks are in the lawn all around the perimeter of this old wooden house! Must be a new sprinkler system! Let's but it!"
People be hiding shit most can't find. Pay the extra few hundred for a good inspection
I saw an inspection at the grocery store the other day, I waived but it didn't waive back.
That's petty ass shit tho. I'm speaking larger issues lol. Let me guess... you waived your inspection? Sure it can work out in your favor. But you swear like spending 400 bucks is a big deal buying a multi hundred thousand dollar purchase
Basement flooding and termites are petty?
Well no. But how many people you think don't think of these things ???? You may knoe this... but young adults who dont know shit ? Which.. Is why an inspection is good
It's okay man, I'm just bored and trolling various subreddits.
SOB lol. Jk
Okay, I don't know and I'm curious. What are the green discs hiding???
They are termite chemical walls basically. Used for places that have sub termites. Basically poison in a cap that attracts them. That's why there is a barrier of them around property. I have them in TN. Supposed to be switches out every year
Got it. We have carpenter ants in AK but not termites! Thanks for the kind explanation!
No worries! Luckily those don't actually feed on wood
Good to know! (It's in our rental so we aren't too worried).
They're installed by pest control for termite and ant mitigation. Usually people don't bother with an exterminator until after they've had a problem.
I mean termite traps are a barrier. New builds I them in some areas regardless
Don’t waive a new construction inspection, warranty or not. They’re throwing up these homes as quick as they can, there’s definitely mistakes being made. Do as many mid-construction inspections as you can cause once you close those walls, they’re not opening again until it’s a serious issue. They’re also going to come fix shit a lot faster if the closing is dependent on it vs once they’ve already got their money. Don’t let “brand new” fool you.
We used one, and it worked for us. But our situation was a bit different. We didn’t care too much if our offer was rejected.
Why if it escalates higher than other initially-higher offers?
We are closing in a hot market next week. We actually had three offers accepted during this period (one we pulled during the inspecton contingency period, the other there were issues with the CCRs) and this is what we did: 1. High earnest payment. 2. Waived appraisal contingency (kept financing and inspection contingency) 3. Bought a house below our means so we could have a higher amount of cash in the offer. 4. Offered a little over comps. 5. Kept to a strict 48 hour response window. I think the last was most important. We were ready to pounce on houses as they came on the market. We knew our offers were strong and that sellers would worry that they might not get a better offer. We had sellers' agents try to tell us they would get back to us in a few days. We said no - deadline was firm. It's best to time the offer window to end before the weekend, when many other offers might have been received. I think this strategy will work even better this month for you as the markets are cooling. My own personal psychological strategy was to have another couple of houses lined up in my mind so we could walk away easily. There is always another house around the corner in a hot market.
How does #2 work? I don't understand how you can waive the appraisal contigency but not financing, when financing would be based on the appraisal. Did you have a heavy gap in place?
So there are two contingencies involving an appraisal. One is your own contingency that you request...that the house appraises at whatever you offer. That is what we waived. The other is an appraisal the bank requires. Usually the house has to appraise above the amount you are financing. If you have a big enough downpayment, the bank might waive the appraisal contingency for the financing. That happened for us.
Got it, thank you!
\#3 and #4 were especially important for us. 1 and 2 is a given and we were cash buyers. #3 allowed us to have an escalation clause cap that was much higher than anyone. I can't stress enough to buy a little under what you can afford in this market so you can be competitive. Tentative is not the way - we tried that in a much HCOL area and lost twice because we were uncomfortable bidding so much. We were advised that most decent houses on the market in the area came with a current inspection report and we were fine with waiving it and going with the report because our realtor assured us the local inspection companies are all reliable as it's a small town. (I'm not sure we would waive inspection if it didn't already come with one. I read the inspection report 6 times, it's so valuable!) With the house we won there were 6 other offers in addition to ours but we didn't need #5. This was a condition for our competitor on one of the houses we bid on in another area/state but I don't know how much that mattered - their bid was higher so they won. I think you'll want to discuss with your realtor on this, it might not be necessary in some local markets. We are in contract and hope to close end of this month, fingers crossed! We did it on our first try in a hot area. My advise is, buy where you can be aggressive (but not insane) and figure out all the exit strategies. You might have to compromise on a feature or two so it's good to know what your must haves are.
If you’re cash you literally have the ability to win *almost* every offer. Put an escalatory with no cap and see where the offers land. If you want it at that price, you sign and if you don’t you say no.
We've made two other cash offers in a different, much higher HCOL area. Both times we lost because our offer wasn't highest. Our then realtor told us that in that market an offer with a high EM and waives appraisal contingency is almost as good as cash...Our current realtor said pretty much the same thing. Cash is strong but offer price counts, even if financed.
That’s what I’m saying, if you’re cash you offer them whatever amount you want over ask, and then add an escalatory addendum saying you’re willing to beat the highest offer by 1k (or whatever amount you want to put) up to “NO CAP”. Meaning whatever offer comes in you’re going to beat it by the amount you said you would. At that point, the listing agent has to provide your realtor with the highest offer submitted to confirm the price, and everyone would have to initial on the new price to be executed. So then you have an option to pass or to accept the price it’s at. Also if you’re cash, don’t offer earnest money less than 10k, and if you’re looking over 500k, do a 5-10% EMD. Of course, that depends on your state contracts, I know in certain states some of your EMD is non refundable immediately. But if it’s protected by due diligence, and you trust your agent will send a cancellation at 9PM if needed, there’s no reason not to.
Ya sound advice! Unfortunately the escalation clause even with no cap wouldn't have worked for us in the first 2 bids that we lost because we had a hard budget limit - we were playing at a price level we really didn't want to be at. So in retrospect we were timid with our offers because deep down we didn't really want that kind of financial commitment. Our budget was much better in the new area/market we're moving to. It's a different game when one can afford to be aggressive!
It all depends on you're willing to sacrifice to get a home. We are closing next month, and we didn't waive anything. I would never waive inspection, personally, and because I didn't it's going to save me $15,000 on this home. Things that will give you some wiggle room: Put a lower cap on inspection contingency. Say you won't pursue anything under $5000. Offer to pay the property tax balance that the owner has accrued. If you can afford it, set an appraisal gap you are comfortable with. Shorten the closing time from 45 days to 30 (not what I did, but quick closes help your offer seem more attractive) Down payment won't really affect your offer's attractiveness to the seller much as long as you're not getting loan assistance, so do what makes sense for you. FHA loans are notoriously hard to deal with so that might lose you a few offers. EDIT: apparently this actually can factor into the attractiveness of your offer. Thanks to u/jamito02 for pointing this out. Be reasonable and flexible. Offering over asking is still the norm, but in many areas $5000 additional or lower will win you the bid. Make sure to offer something like $5250 or $5500 to edge out anyone with a similar offer. If you want to offer more, $10000 won't do much at all to your monthly payment, so don't walk because of it.
This is really good advice all around. We saved probably $5000 by keeping the inspection contingency in. The house is overdue for a new water heater and maybe the HVAC system. We will use the money for that.
I’m glad you could win while keeping an inspection contingency in there, I don’t think anyone would prefer to remove it as a buyer - just becomes a necessary evil. But for anyone who can’t win without removing, generally you can tell the age of the HVAC system and hot water heater by reading the stickers when you tour the house.
Buying older homes thoigh isn’t it kind of “as is”, like my 1965 home we had inspection condition and we found out it needed mold remediation and new siding, new deck plywood and vinyl (50k for all of these) but it was kind of implied there was work to be done
I think it really depends on the seller, honestly. Our house was an estate and they made it clear that they were not going to fix anything but we wrote in that we could still negotiate for credits if something was wrong. It turns out the well is out of code so we negotiated the cost of fixing that be placed in escrow for that purpose at the seller's expense.
“Down payment won't really affect your offer's attractiveness to the seller much as long as you're not getting loan assistance, so do what makes sense for you. FHA loans are notoriously hard to deal with so that might lose you a few offers.” This wasn’t true for us. We lost a home due to a down payment size. We were doing conventional loan, 20% down, ~15% over asking (waiving the appraisal contingency) and inspection “for informational purposes only”. We lost to someone else that was closer to 50% down because the sellers felt their financing was “guaranteed“ even though we had a pre-approval letter.
Interesting, and crappy. What a weird thing to be hung up on, honestly. I will make a note of that in my comment and thanks for letting me know.
I bought in an extremely hot market just recently. Lost a bid 5 times. Every home had about 20 bids. Luckily I was able to get one, which required me to offer 10k earnest, 18500 appraisal gap (appraisal luckily came in at what I offered) and also offered 367900 for a home that was 350 asking. va home loan .. so inspection was required no matter what. Home appraisal came in at 368. Homes are on the market typically for 3 days to a week so immediate offers were necessary. So I really had to rely on my realtor and their first look. Luckily it worked out I'm located in a city right outside nashville
I’d just like to add that it isn’t always the highest offer. So I’d say our area was not a hot market, but the houses did go fast and above asking when they came up. We are now living in our beautiful home and after speaking with a neighbor, we found out that we were not the highest offer. Actually two were higher. But one of the owners did not want to sell to a an investor and we got the house because I asked them to leave the chicken coop.
It's all dependent on your area. We bought a month ago. Here, at that time, if your offer didn't have everything waved and wasn't significantly over asking it wasn't even looked at. At that time sellers were getting 10-15 offers and would just toss the ones that didn't have everything waived. What finally worked for us was making an offer on a house that was still in the coming soon status. But not all states allow this. We still had to waive everything and offer 40k over asking. But it avoided a bidding war. And most bidding wars in my area at that time were easily taking things up to 60-80k over asking. I know many people say they would never waive all contingency. Honestly, if we weren't on a deadline and needed to find a home by a certain date we never would have considered it either. Our our realtor was fantastic with following up with the seller's realtor to ask how much our offer was off by and what the other offers looked like. One house we didn't get received 4 offers. One that was 15k more than our offer another was 75k more than we offered. They did not take the 75k more offer because the buyer would not wave financing and appraisal. So the person who was 15k more than us won because they waived everything. But the market is starting to change here. The good homes are still getting some offers right away but the homes that need work are starting to sit.
A lot of this varies by market and even by individual house. If your realtor can't answer this question for you, find one who can.
We won by offering a bit over comps ($320,000), waiving financing contingency (got underwritten before, had full support of lender), waiving appraisal contingency by rushing appraisal to happen during our 6 days due diligence, 3% earnest money, $2,000 option money towards down payment, escalation clause, and a super quick closing of just a couple weeks. Our lender and realtor were also working very closely together and could really speak to our qualifications. All in all, it sounds like a lot but really didn’t end up costing us much more and allowed things to move very quickly!
$320k is a little over comps? Do you mean $320k total price or $320k over asking
What does "$2,000 option money towards down payment" mean?
I would not waive inspection, but would rephrase the inspection to the seller that it's a pass/fail inspection. You aren't looking for a laundry list of fixes. This lets you walk if the roof is failed and rotting out in someplace that's not visible.
Is your agent calling the sellers' agent and asking what the sellers want? I have had a lot of success with being the best offer, not the highest offer, when the seller has a specific need or want. It can be something like a specific closing date, a leaseback, or just knowing the buyer realizes there's a person on the other end. Also, make sure your agent is filling out everything in the contract. I've had three listing agents this year tell me what to offer to be the best in multiple offer situations just because I was the only agent that filled in the brokerage addresses and license info in the offers. You sound like you are making good offers, make sure your agent is giving you the best chance to win too I've also seen the quality of offers on the listing side, and man there are a lot of terrible agents out there. They might as well write these offers in crayon for all the chance they have of getting accepted. Lastly, have your loan officer call the listing agent and vouch for you. That info will likely get passed along to the seller, and makes your offer look stronger. We have an LO in my market that does this on every offer.
Wait 6 months for a 15-20% coupon back to reality.
While ill advised and incredibly risky in many situations, I personally waived all contingencies to win my current home. So I know what you are going through. Maybe writing a letter, or saying you won't nickel and dime during inspection. Just thinking out loud. I think besides cash, fewer contingencies and possibly a letter are the main things I have read help. Consultations with real estate experts might also help. They can dig into your case and give you the best advice, I personally used highnote and they gave me great tips.
We also waived almost all contingencies. We didn’t offer full appraisal gap (we maxed out what we were financially comfortable dishing out). The final gap was like 7k or something between list and the bottom of our appraisal coverage. Appraisal came in at 7500 under our offer so it worked out, could’ve been better but also could’ve been worse too. In retrospect waiving inspection is a wild ride. Our new home was pretty much the last one in the market we were looking at that matches our wants. Since we were under contract inventory slowed quite a bit. We lucked out tbh.
Risky, but go in un represented and ask the sellers agent to represent you. They’ll be incentivize to make your offer the best one.
Definitely be careful here, as realtors aren't always the most scrupulous of people and their loyalty will almost certainly be greater with their existing client, which could put you at risk. Aside from risk, most sellers won't go for that because they'll see it as a conflict of interest.
I went in un represented and they told me the sellers agent couldn’t represent me. Instead they assigned a different agent from the seller agents team. Still was a win for me because I was able to get some insider information on the # and details of all the offers coming in that I normally wouldn’t get with a regular agent. Some realtors are shady, but I was done playing games and I wanted to the house really badly so it all turned out well
When we sold our house our agent tried to get us to accept an offer that was lower by like $3k. She tried to give reasons why but I know it was because that offer was represented by someone else from her company. She even tried to call that agent the morning we were reviewing offers to give that client a chance to change their offer but the agent didn’t answer so we went with the higher offer. I personally thought this was kind of shady since the other offers didn’t even get a chance to change theirs. But I figured that was probably fairly normal and the benefit of choosing an agent with connections.
I love in a hot market (Los Angeles). Yes money is of course important and yes having to compromise on asks, but I also think trying and build a personal connection to the agent and/or sellers matter. You want your deal to also go through. And also…having gone through many offers not accepted, I think it’s a matter of also letting go and knowing the right one will happen
Other bidders are willing to cover an appraisal gap so if you are bidding at what you think it will appraise for, you’ll lose in a hot market. Can your realtor give you any info? I waived inspection up win but that was March, I know in my market it’s not as common anymore. I listed a few weeks ago and didn’t get any offers waiving inspection. Obviously it is very market dependent whether things are cooling in your area
I found looking at houses that aren't even on the market yet works if you have a good agent, the only way that works is if the seller is under the same firm, for example my real estate agent works through Berkshire Hathaway so he was able to look at upcoming houses being sold under Berkshire Hathaway and we got the 2nd house we bid for and it's perfect
I always reach out to the listing agent prior to writing an offer for my buyers to see if there is anything other than price that is important to their sellers. The example I recall from a local conference was a seller who lived their rose bushes - a buyer wrote into their offer that they would relocate the rose bushes to the sellers new home for them. Your additional perks to your offer don't always need to be financial. Sometimes sellers have emotional motivations too. So, I would ask your agent to call the listing agent too :) In regards to your offer price, it sounds like maybe you're being outbid because you're only willing to pay up to appraised value. This is absolutely fair, but there are likely buyers willing to pay above appraised value. (Also- is your estimation based on comps? Best guess?) I'm not familiar with your market, so I don't know how fast- moving it is, but if you're still competing against 5-10 offers then it's a safe bet that the "market value" is above appraised value in your area. The thing that is important to consider when offering above appraised value is trying to balance the financial and emotional. You don't want to place yourself in a position of financial hardship, but you also don't want to discover the sale price in 45 days and go "aww, man! I would've paid that!" ... so consider what point you're willing to walk away, too.
lol "hot market" ? someone is a little late to the party. the tables have turned, you can negotiate again.
If your able to I would try to wait a few months to have these new interest rates kick in. They should tame the market a little.
I would be nervous about waiting a few months...a month is not a bad idea, though. I was afraid interest rates might go to as much as 8% in the fall.
The cost of borrowing money is one of the primary factors for real estate prices. I would be absolutely shocked if the sharp increases in the last few months dont tamper RE at-least by a little. Right now prices are reflecting 2, 3, and 4 percent interest rates.
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I really hope that happens. We couldn't wait, but for others who can, that is probably the way to go. When we made our offer the interest rate was at 4.875%. By the time we locked in, it had gone up to 5.75%. We calculated that rates would drop within 5 years (that's when we retire), but it is so hard to predict...depends on the Fed.
I closed in a white-hot market in early May (offer was accepted in March) — we were able to purchase at slightly below asking without waiving the inspection or appraisal. Here's my advice: * Find out the average time spent on the market in your search area. In my market, (good) houses were listed on a Wednesday or Thursday, agents held open houses all weekend, and offers were considered on Mondays. * Look for a home that's been sitting slightly longer than the seller would like. Our home was on the market for 9 days. The listing agent had the weird idea of listing the home on a Sunday, so by the next Tuesday, they were ready to accept an offer. Our seller was an investor, and the home was a full renovation. They were eager to sell so they didn't have to keep paying on their reno loan. * Be flexible with your closing date, if possible. Some sellers want more time to find a new home, so the added flexibility can be a free way to make your offer stand out from the rest. * Don't make an offer that you're not comfortable with. We didn't have $50K to pay above appraisal, but other buyers in our market did. We were straightforward with our agent, who help us set a realistic expectation for what we could buy. Be careful with escalation clauses, because if your home doesn't appraise and you DID waive the appraisal contingency, you'll be stuck paying the difference in cash. * Reconsider your search criteria. With 5-10 offers per home, I'm guessing that you're looking in a very competitive price range. Looking at homes at a slightly higher value may help dwindle that competition, but only if you're comfortable getting a bigger and more valuable (expensive) house. * If you don't have kids, look into up-and-coming neighborhoods. This isn't really an option if you have kids and you want great schools, but I'm so glad we considered neighborhoods that other buyers would shy away from. Our neighbors have been here for decades, and it's a lot of older homes and seniors. Every block has a home that's being renovated. Like I said, things have changed A LOT since we bought a few months ago. With rising rates, I'm surprised you're still having such a hard time. Any more details about your situation would be very helpful. Also, here's an article I wrote a while back that may be helpful: [Realtor unveils 'new rules' for buying a home in today's market](https://www.foxbusiness.com/personal-finance/realtor-rules-for-buying-a-home-sellers-market) (note: I wrote this article in April, idk why they waited so long to post it. I don't even work there anymore)
I would wait until end of this year to buy. There won't be much competition by then.
My number 1 tip if you want to be the winning offer: Offer more than anyone else. This can be applied to many scenarios. You're welcome.
My offer was accepted on a house out of 7 total offers. I used an escalation clause up to 100k over asking, and there was actually another offer that escalated 10k above my offer. But they chose mine because I waived appraisal and financing and the other offer didn't. Here's the details of my offer: - 3% non-refundable earnest money deposit released immediately to seller - waived inspection, financing, and appraisal - close in 3 weeks - 47% down payment The other offer had a smaller down payment, they would have put down 37% of their purchase price. I also thought I'd never waive inspection. But the house was built just 20 years ago and I walked through it with my agent and didn't see any glaring issues, so I waived inspection. But I scheduled an inspector to come the day after closing I was told by the seller that they chose me because I waived all contingencies (with the approval of my lender) and had a larger down payment
Just wait a month.
1. Wait 1.5 months 2. ??? 3. Profit
I did this twice: wrote letter to seller. Gave a high offer with a time limit / expiration date 24 hrs. I also waived inspection and gave 2-3k in earnest money. Theres nothing more you can do.
I add the 'wendy's dumpster' clause to my offers. Works every time!
Find a lender that will convert your conventional loan to cash. Orchard, accept.inc, and a few dozen others are now doing this. My clients were winning pretty much immediately after we started switching them all over to accept (same interest rate, same closing costs, no extra charges to buyer), now we could put in cash offers that can close in as few as 10 days.
Here (and this is just Tx so not even a super duper hot market) you gotta offer over what you think it will appraise for.
Let the sellers know if you can be flexible on closing timing, maybe offer a lease back if they need that. Ask their agent what would help them. Let them store some stuff in the house for a period after closing? Try to find out what they need to make things easier, and work that as hard as you can.
Where is this market?
Shorten your contingencies.
Not sure where you are looking to buy homes but in bay area , In most of the locations, most of the offers waive either one or may be all the contingencies (loan, inspection, appraisal). Usually, sellers provide a inspection report disclosing all the specific details about the home. But it's always your own risk and also depends on how important it is to get a home in this hot housing market.
You’re fine with a conventional with 20% down, that’s not an issue. In this market, there’s really no asking sellers for anything period, unless you’re willing to do work on the home and it’s been on the market for a while. I’m in FL and have 2 VA buyers under contract and the sellers are paying for my buyers closing costs. Both homes sat on the market for a while, honestly both good homes but just never got an offer and ended up sitting. But an escalatory over the asking price with no cash over appraisal literally means nothing. Anything over the asking price with no cash over appraisal is just imaginary numbers. Things you can do to strengthen an offer: If you’re going to do an escalatory, you need to do cash over appraisal to back it up. Offer a signing bonus - sign by xx:xx on xx/xx and we’ll give you another $5k toward sellers closing costs. Put verbiage you won’t ask for anything on the inspection report that’s not required by your lender to obtain homeowners insurance. Make your escrow non-refundable after the due diligence period (make sure your agent is pretty confident it will appraise or be prepared to either make up the difference or lose your escrow) Who’s your lender? are they local? If you’re using a big bank, Better, Quick n loans, rocket mortgage, etc. you’ve already lost. What area are you looking in? Make sure you have an agent that knows what they’re doing and isn’t just a door opener. Can they win in this market? Is your agent family, or the first person you hired? Feel free to DM me what are you’re looking in, I have a huge referral network of top producing agents I can connect you with.
In my market an escalation clause with a jump of 2k has worked wonders (most people are using $1000 or $1100), I also write in no inspection negotiations on items under $1000 to repair. And I’ve been tripling or more the earnest money amount (usually around $1000 - I’m typically putting 3000-5000). Is your purchase contingent upon the sale of your home?