After weeks of viewing property listings, you’ve finally found the one—the dream home you’ve been looking for. Given Connecticut’s burgeoning property market, however, you’re likely not the only buyer eyeing that property.
How do you ensure that your offer stands out from the rest? To help you make an irresistible offer, we offer these eight pro-tips:
Know the market
The property market goes through cycles and it’s worth knowing what phase it’s currently in when making an offer. In a buyer’s market, where houses for sale in Litchfield, CT are plentiful, sellers are often more willing to accept offers below their listing price. If it’s a seller’s market, however, they fully expect a bidding war to ensue given the limited listings on offer. Work closely with your agent to come up with a winning offer based on the state of the market.
Check comparable sales
How do you know if a property’s asking price is fair? Ask your agent to compile a comparative analysis of recently sold homes in the area (known as “comps”). Homes similar in location, square footage, age, and style tend to occupy the same price band. Comps let you know if a listing price is in line with market expectations, so you can increase or decrease your offer accordingly. Just be sure to use data that is no older than six months.
Review the listing history
Taking a look at a home’s listing history can also inform your bidding strategy. The typical Connecticut home stays on the market for an average of 96 days. If the property has been listed longer than that, the seller might be more willing to accept a lower offer. Likewise, check if the property has been relisted. This is often done due to price correction or to make a house seem like a “new” listing again. Either way, relisting often indicates a seller who’s motivated to sell quickly and is willing to negotiate.
Show you’re pre-approved
Many sellers have been burned by buyers who make impressive offers but fail to secure the financing needed to close the deal. That’s why sellers prioritize prospective buyers who have mortgage pre-approval. In a nutshell, pre-approval indicates how much a lender would loan you if you applied for a mortgage today. It’s a great gauge of financial capability because you actually have to file for a mortgage application and undergo credit checks to receive pre-approval. In highly competitive markets, many sellers only look at offers from bidders with pre-approval, so make sure to get yours ASAP.
Up your earnest deposit
Earnest deposit refers to the non-refundable “good faith money” included in your offer to signify that you’re all-in on buying a home. If the seller accepts your offer but you fail to hold your end of the bargain, they keep the money. Typically, earnest deposits are pegged at 2% of the property’s contract price. But if you want to make an impression and convince the seller you’re the right buyer, consider upping that amount to 5%.
Trim down your contingencies
Buyer contingencies give you an out should you encounter deal-breaking issues during the escrow or closing phase. That said, having too many contingencies can make you seem like a high-maintenance buyer and cause sellers to pass on your offer. One clause you should consider dropping is the appraisal contingency, which allows you to back out of a deal if your lender determines that a property is worth less than your mortgage application. Guaranteeing to purchase the home regardless of its appraised value is sure to attract a seller’s attention.
Give an all-cash offer
The majority of homebuyers apply for a mortgage, but if you have the funds consider making an all-cash offer instead. Sellers often prefer such offers because there’s no risk of a mortgage application falling through. All-cash purchases typically close faster, too, since there are fewer buyer contingencies and there’s no need to apply for financing. Closing costs are also lower since you don’t have to pay banking fees or hire third-party contractors to conduct appraisals.
Price is the primary consideration for sellers, so don’t scrimp on your offer. Make your highest offer first and see where things lead from there. Not only will you catch a seller’s eye, you’ll also tell them that you’re serious about buying the property.
Thinking of buying a house in Connecticut? Tap the expertise of Fazzone & Harrison Realty LLC to enjoy a smooth and hassle-free home-buying experience. With 25 years of experience in the local real estate market, we’ll help you find your dream home in the most in-demand neighborhoods in Litchfield County.