Offer
Jeffrey Arron

In a hectic real estate market, competitive offers can become the norm, as many experienced throughout this year.

If you are trying to purchase a home and there are competitive offers, what can you do to try to ensure you get the house you really want? We spoke with Check Out DFW Verified Expert Jeffrey Arron about this topic and this is what he had to say.

When there are competitive offers for a house, what are things I could do to make sure I get the home?

Unfortunately, there is nothing short of offering a crazy amount of money that will ensure you get the home, Arron said.

“The key to helping you make the winning offer is to craft it in such a way as to give the seller the utmost confidence in the strength of your offer,” he said. “The last thing the seller wants to do is to take the house off the market, and then put it back on due to the inability of the buyer to actually purchase the home.”

Arron offered a short list of the things you can do to make your offer the most compelling:

1. Secure a solid pre-approval letter from your lender

Some lenders are able to obtain approval from underwriting for your loan. This gives the seller more confidence that you will not have any problems securing the loan, Arron said.

“The higher the approval amount, the greater are your chances with the house,” Arron said.

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2. Increase the Option Money amount

Of course the absolute amount of the Option Money amount will depend upon the price of the house, Arron said.

“Below $1MM, I have seen Option Money payments of up to $1k,” he said. “On houses over $2MM, I have seen $2k+. The higher the Option Money, the lower the chance of the seller thinking you may walk away during the option period.

3. Increase the Earnest Money

The normal earnest money payment is 1% of the sale price, Arron said. If you have the funds to double or triple that amount, that would show the seller that you have more skin in the game.

4. Waive the inspection period, or keep the period no longer than 5 days

“The only case in which I would ever advocate waiving inspection would be if the house had been very recently built,” he said. “The Seller's Disclosure Notice should then point out any trouble areas.”

But ff the house is older than 3-5 years, Arron said he would strongly recommend the inspection.

“At that point you would begin to see deferred maintenance issues,” he said.


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5. Waive the appraisal contingency

Arron said this right can be partially or fully waived. In the case of a full waiver, any shortfall between the appraised amount and the sale price would have to be made up with a cash payment at close. A partial waiver, set at some point below the sale price, can protect buyers from inordinately low appraisals.

“A seller will lean towards full waivers so as not to have any open issues or risk resulting from the appraisal,” he said.

6. The offer price

In this market if the house presents well, is remodeled or updated if needed, is in move-in condition and is priced correctly, there will be multiple offers all over list, Arron predicted.

How much over list should you offer?

“This is a conversation you should have with your real estate agent,” he said. “You don't want to pay a price for a house that is well above where recent comparable sales have been very recently made - it may take a long time to break even on the home. The best you can do is make a competitive offer taking into account all of the above suggestions. As with most agents, I have seen offers that don't make any sense, and you cannot compete with those.”

Arron said he recognizes that this can be a frustrating process, but a strong offer will get accepted at a place and time beyond your ability to foresee.

“Go into this process understanding this, and you will, in time, find your home,” he said “In my experience, a heartfelt letter to the seller with a picture of your family can't hurt in competitive situations.”

About Check Out DFW's Expert Program: Our Verified Experts are vetted and handpicked to participate in answering reader questions. They do have the ability to participate in marketing programs that enables them to answer more questions and distribute their answers more widely. But they cannot simply pay to become part of this exclusive program.