Buying a house in a time of low supply and high demand can be an overwhelming experience.
Inventory has decreased in the last month and for the quarter, according to data collected by the Greater El Paso Association of Realtors. As a result of the home shortage, available listings draw plenty of interest and average eight to 15 offers, depending on the price range.
“House prices have increased quite a bit since 2020,” says Jennifer Woo, real estate agent with Sandy Messer and Associates.
Texas Realtor Shawn Jolley, with Pindrop Realty, says local buyers now compete with commercial buyers, plus the hundreds of families looking online.
Woo adds that the number of cash buyers – buyers who always have a leg up – has also grown.
Fortunately, there’s ways clients can improve their odds of winning.
“The name of the game is creativity,” Jolley says. “The current market favors the seller, but we’ve had a lot of success getting offers accepted without buyers giving away an arm and a leg.”
Marysol Terrazas, another Realtor, says locking down the dream home is possible when consulting a reputable expert. The Home Pros Real Estate professional encourages buyers to embrace the competition and act now.
“It won’t get more affordable,” Terrazas says. “Trust your realtor, keep your eye on the prize, and go full force with the plan.”
1. Get Pre-Approved
A pre-approval shows the seller that the buyer can afford the home and better ensures the deal. Although a pre-qualification is a good first step, it relies on self-reported information and remains an estimate. A pre-approval verifies a client’s financials.
2. Give a larger earnest money deposit
Good earnest money speaks volumes in this market, Jolley says. Since earnest money is non-refundable, it signals the buyer is highly committed and won’t walk away. A few years ago, a $500 earnest deposit was acceptable, but $1,000 to $5,000 is ideal today. It’s best to give no less than one percent of the sale price.
3. Cover the appraisal gap
An agreement to cover the appraisal gap gets one closer to sealing the deal. If individuals submit an offer above the asking price, which is likely in the current market, they can agree to pay the difference between the appraised value and the sales price, Terrazas says. Jolley agrees a cash-backed appraisal helps the buyer get the home.
4. Offer a leaseback
A leaseback gives buyers an advantage when multiple offers are on the table. In this arrangement, the buyer allows the seller to stay in the home while they secure a new property. A 90-day leasing agreement is typical in the current market. Buyers can choose to lease the property, let the seller stay for free, or waive utilities for an agreed timeframe if they want to make their offer more competitive.
5. Write a letter
When written under fair housing requirements, a heartfelt letter can help a seller lean toward an offer if there are two of the same. Woo says sometimes these letters will include photos as well. For example, if a seller has grown attached to their home, they may want it to go to someone who will love and care for it the way they did. “Letters create a sentimental bond. It may not work if the seller is only looking to make a profit, but why not pull out every card we have in our hand to enhance your offer?” Jolley says.
6. Be flexible and patient
To win the bidding war, some buyers will waive their option period or home inspection contingency. However, Terrazas and Jolley advise against this. “You never know what sort of problem you can encounter if you do this,” Terrazas says. Woo also adds that timing is everything. “Some people look at houses and fall in love with a home when they aren’t ready,” she says. “It’s always best to make sure your finances are in order before you start looking around.”
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