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How to Buy in a Competitive Market

June 16, 2022

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Are you in the market for a new home and want to give yourself a leg on the competition? In this
episode of Naturally NWA, I’m going to give you some tips that will increase your chances of securing
the home of your dreams even in this hot market. We’ll look at everything from getting preapproved to
submitting an offer so you have the best chance of getting the house you truly want.

Getting Preapproved

Don’t look now, but we are back in a competitive real estate market. Don’t worry, though; I’m going to
show you how you can put in a winning bid without overpaying. High rents and low interest rates have
increased the buyer pool, which puts us in a strong seller’s market. This makes it tough for buyers,
especially first-timers. So if you’re in the market for a new home, you may want to follow these tips.
The first thing you want to do is get preapproved for a mortgage—before you even begin looking at
houses. An experienced agent will not work with you if you are not preapproved, and a seller’s agent is
not going to even look at your offer if you’re not preapproved.
So save yourself some time and disappointment by speaking to a local mortgage professional to get the
ball rolling.

Making The Offer

My second tip is to make them an offer that they cannot refuse. Once you are preapproved and have
found the home of your dreams, you’re going to be ready to submit an offer. Keep in mind that there
are four main items that sellers look at in an offer: the purchase price, deposit, closing date, and
conditions.
First, you want to put in your best price. One of the biggest mistakes homebuyers make is putting too
much emphasis on the asking price. The asking price is not an indication of value; it is simply an arbitrary
number. In some cases, the asking price is not the endpoint but is the starting point for offers. I
understand everybody wants a deal, but sometimes the asking price is low on purpose to generate
multiple bids.
If you’re in a competition, guess what? The seller will not bother negotiating with a lowball offer. They
will just take the best one.

Getting Help From Your Agent

To determine the market value of a property, make sure your agent does their due diligence and gives
his or her opinion of the estimated market value of the property you’re looking at. This may be under
asking, or it could be over asking price.
This is another reason why you need a good buyer’s agent. They are looking out for your best interest,
not the sellers. The listing agent is working for the seller, so his or her job is to get as much money for
the seller as possible.
Saving a few bucks off the asking price may sound like a good deal, but in reality, you may still be
overpaying. That’s why you need your own agent to do the research.

Your Deposit And Closing Date

Next, you’ll want to make a sizeable deposit. Sellers are more likely to accept an offer with a larger
deposit because that speaks to the seriousness of the offer. Typically, 5% of the purchase price should
be enough.
You also want to be flexible with your closing and occupancy. The closing day usually takes a backseat to
the purchase price, but in some cases, the sellers will require either a long closing or short closing. The
more flexible you can be with your closing, the better your chances of acquiring the property—even if
you don’t have the highest bid.

Be prepared to offer the seller additional time to move out or find a new place to live. In most cases,
your lender is going to require you to take possession of your new home on or before 60 days after
closing, so just keep that in mind. Your agent should be able to help you negotiate a rent-back situation
to help you cover an extra month or two of house or rent payments at your current place.

Conditions And Contingencies

Because you want to submit as clean an offer as possible, the fewer conditions you have in your offer,
the better your chances. However, make sure you don’t do anything you’re not comfortable with. If your
pre-approval comes in much higher than the price of the home you’re looking at and you have at least
20% down, I wouldn’t recommend dropping a financing contingency.
I would also not recommend dropping the home inspection contingency unless an inspection report was
already done by the seller and provided to you. If you are happy with that inspection report and you can
comfortably remove that condition from your offer, it’s going to go a long way. As I said before, you
need a good buyer’s agent. I can help guide you through the process and give you valuable insight that
will ensure you’re not being taken advantage of.

Writing A Letter

My last tip is to write a letter. Writing a letter to the seller is a nice idea and may push your offer to the
top—but it will not replace any of the previous items I just talked about. Where it’s going to come in
handy, though, is in a tiebreaker situation. So go ahead and write a letter anyway. It’s better to pull out
all the stops.

Getting Your Dream Home

I hope these buyer tips are helpful to you when trying to buy a home. If you would like more
information, please don’t hesitate to contact me, as I’d love to hear from you.
Be sure to subscribe to my channel so you never miss an episode of Naturally NWA, my show all about
living in Northwest Arkansas. Stay tuned to see what I feature next, and thank you for making us the
natural choice for all of your real estate needs.

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