5 Ways to Make a Winning Offer in a Seller’s Market

If you’re thinking of making an offer on a home and are trying to predict market trends to position yourself to get the best deal, it’s a tough business. Swimming in uncharted waters as we have recently, it’s still a question mark as to where the market is headed.

Still, homes locally are flying off the proverbial shelves. A quick look at homes that closed in Arlington County from May 31 to June 9, about 70 percent were sold in less than 10 days, and the average days on market was a mere 13 days. In Alexandria City, average days on market for the same period was 15 days—with 56 percent selling in less than 10 days.

What does that mean for you as a buyer? Right now it means, the competition out there is extremely tight, and you’d better present an impeccable offer when you find the home you want. As such, we’ve put together our top five ways to have the upper hand when submitting an offer. These aren’t the only things you can do, but if you master these approaches, you should be in the hunt when seller go to pick the “best” offer.

#1. Be first. Being first can do a number of positive things. Sometimes selling agents will honor the first in by allowing the buyer to match the highest subsequent offer. To be first, you need to be ready, so have your lender prepare your lender approval letter for the exact amount of your offer. Also, ensure your lender is comprehensive in the approval process—not only checking credit score, but also assets, bank balances, salaries, and expenses. Communication and responsiveness to your agent in this period is crucial. Make sure you’re available to review and sign all necessary documentation as soon as you can. Strategically, a first-in offer also could discourage other interested parties from submitting an offer, as other buyers sometimes aren’t interested in competing or getting in a bidding war for a property. This is no guarantee you’ll get the home, but it puts you in a very strong early position.

#2. Make a competitive offer. (Don’t low-ball.) Especially in this current competitive environment, making a low-ball offer for much less than the presumed market value for the home can be a non-starter. Yes, low offers are fine and warranted for properties in low demand, or for those that have been on the market for an extended period of time—often because they’re overpriced. Regardless, make a smart, competitive offer based on comparable sales in the area. Keep in mind, automated estimates from popular websites often do not reflect the market value of a particular property. Work with your agent to find the absolute best comparables for the particular home you’re looking for. Even seemingly small items can greatly impact the market price of a home—things often unseen in online estimates. For example, total square feet of a home has meaning, but so does how the space is utilized. A good view can be literally worth an additional $100,000 (or more) among homes in this area, so keep that in mind. Location also matters. Price differences in the Washington, D.C. region are so hyper-local, that seemingly identical homes just a block or two from one another can be miles apart in price. We can’t emphasize how crucial it is to determine a competitive price for an offer. Have your agent prepare a comprehensive comparative market analysis so you’re fully informed about the best price to offer.

#3. Make a big down payment. An offer with a higher down payment—especially if it is at or above the 20 percent range—can be very appealing to sellers in competitive situations. A large down payment indicates the buyer has cash on hand to possibly mitigate roadblocks that might emerge during the loan approval process. For example, if a home appraises for less than the contract price, a high down payment can give the seller some peace of mind that an agreement on price still can be reached. It also simply indicates a stronger financial picture for the buyer. A bold earnest money deposit (EMD) can help indicate a buyer’s interest as well. While not the down payment itself, the EMD can indicate a buyer’s seriousness on an offer, and it is applied to home cost at closing. Typically, EMD amounts are about 1 percent or a little more. If you’re a serious committed buyer in a competitive situation, you might want to up that EMD to, say $10,000 on a $500,000 home purchase instead. If you withdraw on a legal contingency, the EMD will be fully refunded, but a higher EMD can indicate you really want the house.

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Christopher Prawdzik and his wife Angela Logomasini are licensed Realtors® with Samson Properties in Alexandria and are members of the Northern Virginia Association of Realtors® Top Producer’s Club. Operating as D.C. Region Real Estate, they serve the Virginia, Washington, D.C., and Maryland real estate market and offer comprehensive real estate services, including 4½% full-service listings.

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