House hunting can be a stressful process, especially if you get outbid on the home you really want. There are ways to ensure you don’t get outbid and it all starts with hiring a good real estate agent. Once you have the right agent on your side, you want to make sure you understand a few more ways to keep from getting outbid on your dream home.
Offer more than the Asking Price.
If you’re afraid you might get outbid, you can offer more than the asking price. Most buyers think they need to offer less than the asking price to negotiate. However, if you do this and somebody else offers the asking price, you may just lose the house.
Of course, if you plan to offer more than the asking price, you want to make sure you are comfortable with that number. If your offer is accepted, you will have to live with it and know that you spent more than the asking price on the home.
Make Sure Your Loan Paperwork is Done
Before you even think about placing an offer on a home, make sure the loan paperwork
is done. If it’s not completed, there is a possibility you will lose out because you are bidding against a cash buyer. If this happens, the seller may accept a lower offer because it’s all cash and can close faster.
Make sure you remain proactive with your lender and get everything done as quickly as possible. When all the paperwork is done properly with your lender, you can close on the house much faster, giving you an advantage over a lower cash offer.
Make a Cash Offer, but do it Right
Cash offers are very desirable for sellers. If you’re in a position to make a cash offer, you may be able to avoid getting outbid. However, this needs to be done properly. Make sure you get the help of your real estate agent to ensure you put in a proper cash offer on the property.
Use an Escalation Clause
An escalation clause allows you to tell the seller what you want to pay for the property, but it also allows you to tell the seller you will pay more, if they get a higher offer. It’s a very simply thing in theory, but very detailed when put into practice.
Generally, you will put in an original offer and choose an amount you are willing to escalate that price to if a higher offer is made. You will also choose a maximum amount you are willing to pay.
For example, if you put in an offer of $150,000 on a home and add in an escalation clause, you may be willing to increase the offer by increments of $3,000 above any other offer. You may also set your maximum at $165,000.
If the seller doesn’t receive any other offers, you will pay the original offer of $150,000, if they accept this offer. However, if another offer comes in at $152,000, your escalation clause will increase your offer to $155,000. The only way you can be outbid is with an offer of $166,000 or more, in this scenario.
There are multiple ways to keep from getting outbid when you find the perfect home for you. Use these strategies, along with the advice of a professional real estate agent and you will not only have a better chance to get the home you want, but you will also be able to get it without overpaying.