In today’s housing market it is not uncommon for realtors to make several offers with their buyers before securing a home. The reason is it’s a seller’s market. The inventory of homes is very low! This imbalance has allowed prices to increase to epic proportions. If you are a buyer, it is brutal out in the trenches looking for a home, with sellers calling all the shots.

If you find yourself in a bidding war, here are some ideas you and your agent can try to improve your chances of coming out on top.

Get pre-approved before you start shopping for a home. Give your realtor your pre-approval letter so it can be submitted with any offers you make. A preapproval letter tells the seller you’re serious about buying their home.

This is important, make the highest offer you’re able, within your budget of course. If you are able, offer all cash, or a very large down payment. Cash is king, so the more cash you offer the more you will stand out in the sellers’ eye.

Have a detail discussion with your agent about contingencies you can consider dropping from your offer. Drop as many contingencies as you can.

Sellers like this because it will help insure, that they will not have to relist their home, because a contingency resulted in a deal falling through.

Add in an escalation clause, this will keep you in the running if someone out bids your initial offer. For example, you offer 200k for a home, but you put in a clause to escalate to 210k if anyone else makes an offer above your initial $200k. With the escalation clause then you can exceed their offer by a prescribed amount. Make sure your agent explains this clause to you, so you understand it.

Think about doing as As-Is, or need I do not say, Waived inspection offer. Truthfully, waiving the inspection is an option I normally don’t even consider. But this market is requiring buyers to pull out all the stops. Think about this option long and hard before you put this in your agreement.

Lastly, offer appraisal gap coverage. This means that if a property is appraised for less than the purchase price you offered. You (the buyer) will cover either all or part of the gap between the appraised price and the purchase price. Make sure you understand that the gap amount comes out of your pocket. The lender will not include this in the financing. Talk with your agent about this in detail.

Incorporating all, or some of these ideas will make your offer much more appealing.

By R. Jones