5 Strategies I Learned for Buying a Home in Today’s Wild Market

  • We expected to have to offer more than the listed price on the houses, so we shopped around for houses that were well below our budget.
  • We waived inspection contingencies in our bids, but we still scheduled pre-bid inspections.
  • Not only did we bring extra money for a low rating, but we made our money non-refundable.

I have been writing and editing articles on buying a home for over two years. But nothing could have prepared me for my own experience of buying a home in this 2022 seller’s market.

My husband and I probably visited 30 or more homes in two months, and we tried to buy six. Each rejected offer was more emotionally draining than the last, but each also taught me how to improve my next offer.

Turns out number six was the charm. Here are five lessons I learned along the way that helped me make the winning bid on a home.

1. We looked at homes that were below our budget

Our mortgage lender pre-approved us to borrow more than I ever imagined. But my husband and I agreed that just because we could borrow so much didn’t mean we wanted to borrow so much.

Once we set our maximum budget, we still haven’t looked for houses listed at a price close to that amount. We knew how competitive this market was and that we probably had to offer a price significantly above the asking price to be considered. One home we bid on was a two-bedroom, one-bath home with 22 bids. It cost about $100,000 more than asked.

For the house we eventually purchased, we offered 15.3% more than the listed price, which allowed us to reach our maximum budget.

2. We asked for pre-offer inspections

In our marketplace, you usually have to waive an inspection for your offer to be competitive. By waiving an inspection, you’re less likely to void your contract if something goes wrong with the home.

However, we always wanted to know in advance of any issues with a home we might buy, so we ordered pre-offer inspections for the homes we were considering. A pre-bid inspection is similar to an inspection, except it takes place before you make a bid instead of after. This way you can decide if it’s worth making an offer on a house.

3. We brought money for low rating

In a seller’s market, it is common for the buyer to have to offer a higher offer than a house. And there is also a potential downside to this for the seller. Lenders won’t approve a mortgage for more than the home’s appraisal – so if the home’s appraisal is lower than the buyer’s offer, everyone is in a tough spot.

In the offer letter for the house we bought, we said we could bring an additional $35,000 towards a low price.


Evaluation

. This means that if the home is valued up to $35,000 below what we offered, we will make up the difference.

If the house was valued even lower, the seller had the option of either accepting a lower price from us or abandoning us and choosing another buyer. But having a low double-digit rating definitely gave us a head start. This meant we were very nervous for the 10 days we waited for our appraisal report – we really didn’t want to drain our retirement savings to pay for this house! (Don’t worry, the house is appraised for a little more than what we offered.)

4. We gave up contingencies

When we made an offer, we waived almost every contingency that we would normally have included in our letter. A contingency gives the buyer the right to legally withdraw from the contract, and he will not lose the deposit he has paid in advance if he withdraws for a specific reason covered by the contingency.

As mentioned earlier, we have waived our inspection condition. We have also waived contingencies for a proper title, information verification period, and right of termination based on the seller’s disclosure agreement.

Fewer contingencies meant there were fewer reasons for us to cancel the contract and for the seller to have to re-list the property. Basically, we tried to make our offer attractive by making everything as easy as possible for the seller.

However, we have not waived the financing contingency, which states that even if we are not approved for a mortgage, we can still provide the money. No. Not at all.

5. We have made our deposit non-refundable

The deposit corresponds to a percentage of your


deposit

that you make in advance, much like a security deposit. Our earnest money deposit was $10,000 and we indicated on our offer letter that we had lost our earnest money.

Normally, we will get our money back if we don’t proceed with the sale due to a problem, such as during the inspection. But since we’ve already given up on so many contingencies, we knew there was little chance we’d get our money back anyway. So we went the extra mile by dropping it completely.

This may have pleased the seller because he knew he could spend our $10,000 right away – there was no way we were getting it back. It also meant that if the valuation came back so low that our extra $35,000 couldn’t make up the difference, the seller could cancel the contract and keep our deposit.

The listing agent told our real estate agent that the non-refundable deposit was one of the main reasons sellers chose our offer. It would have been devastating to lose that $10,000, but we were willing to take the risk.

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