Here’s the dream: You submit an offer on a home and the offer is perfect for the sellers so they accept your offer as is. You don’t need to negotiate and you can spend the next few weeks addressing more pressing home-ownership questions, like “What color should I paint the walls?” and “Do I want a L- shape sectional or a U-shape?”
And though this could happen, right now we are in a sellers market and getting an offer accepted on the first round without negotiation is unlikely.
Sellers are known to reject offers or present counteroffers for a variety of reasons. This is especially likely to happen if you offer a low price, have several contingencies, or are up against multiple competing offers.
If you do receive an opportunity to resubmit an offer for a ‘best and final round’ or are provided a counteroffer from the sellers, it’s up to you to decide whether you want to keep your offer as is, accept the counteroffer, negotiate the terms, or walk away.
In cases such as these, your agent is your guide and will deploy negotiation strategies to get you the house you want.
Here are 5 ways to get you closer to home ownership in a sellers market:
#1 Act Fast
When you receive a counteroffer, you should respond quickly — in the Cambridge and Boston market you often provide a response within minutes. The longer you wait, the more space you leave for the seller to obtain an improved offer from a different buyer. Also if a seller senses hesitation, they may decide to withdraw their counteroffer before you even have a chance to respond.
#2 Raise Your Price
Lean on your agent’s expertise to determine how much money you should add to the purchase price to make your offer more enticing to the seller.
There are 3 things you must keep in mind:
You can’t exceed the monetary confines of the pre-approved mortgage you received from your lender.
When obtaining a mortgage, you will have an appraisal and will need to consider the chances of the home not appraising out at the value you are borrowing which may mean you will also need to waive your appraisal contingency. More on that later!
You shouldn’t overextend your budget!! A good lender won’t let you but keep in mind that you do not want to be house poor!
#3 Increase Your Earnest Money Deposit
Increasing your earnest money deposit (EMD) or purchase and sale deposit is attractive to a seller. A standard EMD deposit is anywhere from $1,000 - $5,000 while a p&s deposit is most often 5% of the purchase price. Increasing your offer deposit or p&s will show the sellers you have more skin in the game. By putting more money upfront you are telling the sellers you are very serious about the home. Walking away from a $1,000 EMD is a small loss compared to $15,000. So put up more money if you can!
#4 Demonstrate Patience About Taking Possession
Depending on the seller’s timeline and needs, changing your proposed close date — the date you become the owner — could make your offer more desirable. Right now, we have many sellers also buying and they have to work around their new purchase and the sellers on their transaction. So, work with the sellers timeline if feasible! Provide them with a “lease-back” agreement, meaning the seller pays you rent for staying in the home for a set period of time after the closing date. Accommodating the sellers needs is a big way to win in a sellers market.
#5 Waive a Few Contingencies
Want to give your counteroffer an even bigger boost?
Reduce the number of contingencies. It’s your way of saying, “Hey, look, I have fewer ways to back out of the deal,” which gives the seller more reassurance that the deal will close.
But be selective and know the risks: A home-inspection contingency — the right to have a home inspection and potentially request repairs or funds — gives you an out if you spot major problems with the home (and protects you from buying a total money pit). In the Cambridge, Boston, and Somerville market waiving an inspection contingency is a strategy often used to win. But buyers must know, there is a risk!
You might waive your mortgage contingency (even if you’re getting a mortgage and can theoretically pay cash) or a pest inspection contingency.
But ultimately, waiving contingencies depends on your market, your loan requirements, your risk tolerance, and the circumstances of the house in question. And if you waive contingencies and then you find a problem, the seller isn’t responsible for fixing it.