Tips to Win the House of Your Dreams

By Erik J. Martin.

You’re determined to purchase your first or next home in 2023. The competition is fierce due to the low supply of residences available, and skyrocketing home prices and slightly higher mortgage interest rates aren’t helping matters. Nevertheless, you are committed to doing whatever it takes to land the right house—preferably at a price that won’t break your bank.

Prepare to enter the bidding war zone, or at least the “move quickly before someone else gets it” zone.

In other words, hope for the best and prepare for the worst in your home hunting process. It may take longer than you think.

But there are recommended strategies that may improve your chances of getting your offer accepted and outmaneuvering shopper rivals. Here are several tactics worth discussing with your real estate agent:

1. Get pre-approved for a mortgage loan before making an offer.
Most bidding wars today are won without any contingencies in place, including financing conditions. That means a buyer must be completely confident that they can secure financing.

2. Use an escalation clause—but carefully.
An escalation clause is the language put into your purchase contract that indicates you are willing to increase your offer by a particular amount if the seller receives a higher competing offer. The escalation clause is useful, but don’t put a cap on it, such as ‘I will pay X-amount above any bona fide offer up to $500,000.’ This way, if the price comes back to something you don’t feel comfortable with, you can walk away.

3. Make your offer as clean as possible.
Try to remove as many contingencies as possible to entice the seller to accept your offer. However, it’s not recommended to forego your right to a home inspection. You never know what could be wrong with the house until it is evaluated by a professional. Instead, ask for permission to conduct a pre-offer inspection. Sellers often allow a buyer to complete a professional inspection before an offer is made. The buyer benefits by having awareness of any issues that require fixing or addressing after the closing. They will then be able to confidently waive their home inspection contingency without exposing themselves to unnecessary risks.

4. Cater your offer to the buyer.
Winning a home is all about solving the seller’s problems. Instruct your real estate agent to contact the listing agent and ask what, if any, terms would be beneficial to the seller. Then, write your offer providing those terms.

5. Think creatively.
When competition is stiff, sellers worry your appraisal may come in below the purchase price. To ensure the seller will get the price agreed upon, you can offer to make up all or a portion of a potential appraisal gap by contributing more cash to the down payment or restructuring the loan.

6. Use emotional triggers.
Communication is 55% visual in the form of body language, 38% auditory in the form of voice and tone, and only 7% in the form of actual words. Writing a nice letter to the seller is a good idea. But you can go even further by sending them a personalized video of yourself on camera speaking directly to the seller and telling them why this is the right home for you and your family.

Lastly, avoid asking for closing cost allowances or rushing the seller into a decision to meet your timetable.

Competitive buyers write offers with short timelines for completing contingencies if there are any.