Demand for housing in Maryland is at an all-time high, but the number of homes available to purchase is still very low. This creates an incredibly competitive market and can often start bidding wars among homebuyers. According to realtor.com, some homes can get 20 to 30 offers. This can drive up the sales price $50,000 to $100,000 over the asking price. It is easy to lose a bidding war in such a competitive market, especially if you don’t have a plan or advice from a real estate professional.
Before you start looking at homes throughout Maryland, there are some steps you can take to help make the whole process easier, all while making your offer more competitive. First, you should have your financing in order. If possible, it would be best to have your earnest money deposit ready, know how much you can pay towards the down payment, and have your credit profile reviewed. Next, it is important to understand what you are looking for in a home and in a neighborhood. Finally, one of the most important things is that you have experienced real estate professionals working with you. Some of these professionals include a mortgage loan officer, a realtor, and a real estate attorney or closing agent, if applicable.
If you get into a bidding war, you need to know how high you are willing to bid. You need to know how much you want to pay and how much you can afford to pay because those numbers can be quite different in the current competitive market. If you offer your highest bid and it is still not competitive, here are some tips!
Five tips that can help make your offer more competitive:
Get Pre-approved – A pre-approval is one of the essential steps to getting approved for a mortgage. At CMG, our pre-approvals are fully underwritten, and they show that you are a serious buyer and an approved buyer. A pre-approval also speeds up the loan process, which can be the deciding factor for the seller when accepting an offer. You will already have most of the upfront work done with a pre-approval, and the rest of the process moves quickly after that!
Waive Contingencies – Contingency clauses are important and allow buyers to back out of a contract if certain conditions are unmet. One of the most common contingencies is the mortgage contingency which lets you out of a contract to purchase a home if your financing doesn’t work out. Of course, you only want to do this if you are confident that you will be approved for a mortgage.
Escalation Clause – An escalation clause allows buyers to increase their initial bid by a certain amount each time another higher bid comes in. It is a good idea to put a cap on an escalation clause.
Write a love letter to the seller – Writing a love letter was unique, but it became more common and may have lost its charm. Basically, buyers will write a letter to the seller telling them why they are the right buyer for their home. According to Realtor.com, many buyers are still excited to write them.
CMG’s Property Inspection Waiver Program – The Maryland property you are looking at may be eligible for an inspection waiver. Our new tool allows LO’s to get a PIW before you make your offer which makes it much stronger, and you know how high you can go up in the bidding war without having to worry whether the house will appraise at the right price and if you will still qualify for the loan. Community Mortgage Group loan officers can walk you through this process but contact us first to have the information you need in advance of making an offer.
If, at first, you don’t succeed, keep on trying. If another buyer was chosen over you, that doesn’t mean some part of their transaction might not fall through, and if you have a competitive enough offer, you might end up being pleasantly surprised that you are next on the seller’s list!