Once you have found a home that you feel suits your needs perfectly, you want to come out of the gate with a proposal that is going to make a terrific impression on the seller. To help you become the new owner of your dream home, here’s how to make a competitive offer when buying a house in Riverside.
Make a Financial Commitment
Besides a price in your offer, there are a few other approaches to prove your interest in a home by putting your money where your mouth is.
Any serious offer when buying a house in Riverside should include earnest money, which typically ranges between one and three percent of the total offer price and acts as a sort of deposit. If your offer is rejected or the transaction falls through, your earnest money is returned to you.
Another road to take is providing a sizable down payment, which can go a long way to pleasing both the seller and any mortgage lender you may have involved. Aim to put down a minimum of 20% of the total offer price to avoid any additional charges for Private Mortgage Insurance, or PMI, from your lender.
Speaking of your chosen mortgage lender, carefully going through the steps of getting pre-approved for any necessary financing is an absolute must before putting in your offer. After you are pre-approved, your lender can give you a pre-approval letter clearly indicating your ability to cover the cost of the property by acquiring their financing assistance.
Pick Your Contingencies
When it comes time for a seller to comb through the details of their available offers and choose the one that works out best for them, it’s common to find that contingencies are a large deciding factor.
An offer that comes in with a higher price and a laundry list of repair and inspection contingencies could end up costing the seller substantial time and money to the point that an offer with a lower price and few-to-no contingencies is ultimately the better deal. Outside of critical issues and lender requirements, the buyer is more often than not better off taking these concerns on themselves after closing.
One reason this is recommended is that a seller that is in a hurry and wants to get the biggest financial return possible from the sale of their home is unlikely to invest the time and money to get the job done to the standards of the buyer.
Add a Personal Flair
While this may seem like something that is going out of style, some sellers can appreciate getting a personal letter from you explaining why you’re so interested in their home.
Being upfront and honest is the key here in order to help build any sort of rapport and sway negotiations further in your favor. Mentioning some of the features of the home or even its neighborhood is a great way to show you already have a personal investment in this transaction and want to make it work.
As an example, if you have or are planning for a family, bringing up proximity to parks or schools could be an exceptional point to bring up in your letter to the seller.
Consider an Escalation Clause
A lesser-utilized option is to submit an offer that includes an escalation clause, which states that you are willing to pay an additional amount of money over any competing offers up to a certain amount.
If the seller accepts your offer that includes an escalation clause, they are legally obligated to abide by it up to your maximum bid amount.
There is a level of trust required from the buyer when submitting an offer with an escalation clause, so we strongly suggest thinking things over before depending heavily on one.