Competitive Housing Markets Mean You Need to Make a Competitive Offer
No matter where you may be moving, chances are the housing market is competitive. If you’re house hunting, you’re going to need to make a competitive offer or risk having other offers beat out yours. You’re not the only one on the hunt, so make sure your offer stands out so you can save time, frustration, and even costs.
Looking at some of the hottest national markets, we can see home sales and prices are only rising. Texas, for instance, continues to see healthy increases, showing 6.4% growth in annual home sales. According to CCN, “2019 results are outpacing 2018’s performance and one Texas A&M economist predicts 2020 should be even better.” Thanks to the booming job market in Texas, demand is driving housing prices higher and higher every year.
Texas isn’t the only state seeing a strong job market which inevitably leads to a competitive housing market. Colorado and Georgia are also experiencing growth. The Colorado housing market increased 9.1% annually in the seven-county Denver metro area and 5.3% statewide, with the median price of a single-family home rising by 6% annually.
What do all of these stats have to do with you? It means if you want to buy the house you have your heart set on, you’re going to have to make a competitive offer the seller can’t refuse. Your offer can’t look like the others – but how do you get the seller’s attention with your offer without breaking the bank?
Making Your Offer Super Competitive: 1 Secret with 3 Benefits
You may not be moving to Austin or Denver, but most hot job markets around the country mean there are people just like you needing to move into a new home. You are likely house hunting with hoards of others who are looking for similar things when buying a home: close-in neighborhood, proximity to work, good schools, updated features, reasonable price, etc. What can you do to make your offer the one that stands out? We’ll tell you the secret that has multiple benefits that will get your seller excited to say yes to your offer.
Make an All-Cash Offer
The best kept secret to a super competitive offer is this: make an all-cash offer. It may sound out of the question, but hear us out. An all-cash offer is highly attractive to your seller, more so than an offer that is contingent on the buyer obtaining financing or selling their existing home.
When you make an all-cash offer, you are telling the seller you are not only serious, but you can pay cash and are ready to move forward with the transaction now. For the majority of buyers, that’s all they really want to know. They want assurance that the offer will result in closing as soon as possible. After all, they want to move, too. The longer their transaction takes, the longer they have to wait to move, the more risk they have for losing their dream home, and the greater costs they have from paying two mortgages.
Here’s why an all-cash offer wins bids:
It Removes Contingencies
Even though contingencies are common and accompany the majority of offers, the more you can remove, the more competitive your offer will be. Contingencies say your offer is good only if certain conditions are met. The most common contingencies are home sale contingencies, financing contingencies, appraisal contingencies, and inspection contingencies. What if you could remove three out of those four? That’s exactly what all-cash offers do.
Obviously, if you’re paying with cash, you don’t need a lender to slow down the process. You don’t have to fill out all of the lender’s paperwork, supply all of the required financial documents, or wait on an approval. Here’s an added bonus: it also means you don’t need the bank to appraise the property. You can save weeks or even months on the closing process simply by removing the financing and appraisal contingencies.
But there’s more. All-cash offers also mean you don’t have to sell your existing home first before you buy your next one. The lenders are the ones who make this such a sticking point. They are loaning you their money and want to make sure you can pay them back. If the lender calculates that you hold two mortgages, they get nervous.
Even if you have an ample income, it’s risky for the lender. You could lose your job and not be able to pay two mortgages at once. Because of this scenario, homebuyers who seek financing typically have to sell their existing home first before they can purchase a new home. Not fun for buyers but something they’ve gotten used to because it’s the way real estate has always been done.
The all-cash offer takes away all of that frustration and uncertainty, allowing you to purchase the home you want, when you want, and sell your existing home and move when it’s convenient for you. Huge win for you while at the same time, it gives your sellers exactly what they want – a clean offer with minimal risk.
A quick note on the inspection contingency: it’s a critical contingency to have and this is why the majority of offers come with a home inspection contingency. You want to protect yourself from purchasing a home with hidden damage or that needs expensive (and often, unexpected) repairs. An independent, licensed inspector will spend hours at the property you want to buy and thoroughly assess the current “health” of the home. You’ll receive a lengthy assessment you can use to negotiate the price, repairs, and/or the entire offer.
It Poses Less Risk
In a nutshell, all-cash offers pose less risk for your seller. When they don’t have to worry about your financing falling through, the appraisal coming back lower than your purchase price, or your existing home selling first…that’s when they get excited. You’ve just removed the most common reasons for an offer to fall through.
It Results in a Faster Closing
You may not have all of the cash available to make an all-cash offer, but a company called Homeward does and they’ll let you use their cash for a 1.9% fee. All you have to do is apply (which can be done in about 10 minutes). Once approved, they will assess the value of your current home and give you credit for your home equity so you can make your all-cash offer.
With Homeward, you don’t have to get a lender involved or sell your home first. Once your new house closes, you can take up to six months to sell your existing home while you lease back your new home from Homeward. As soon as your existing home sale closes, you get a new mortgage on your new home and repurchase it from Homeward. If for some reason your old house doesn’t sell, Homeward will purchase it from you for a fair price, agreed to beforehand as the “floor price”.
It’s the easiest way to buy residential real estate and it’s the best way to make a super competitive offer. With Homeward’s cash in hand, you can get the house you want, save money, and move when it’s convenient for you. The sellers get what they want and you do, too. All-cash offers streamline the process and make house hunting fun again.