It’s finally happened: After weeks or months of searching for the perfect house or condo, you’ve finally found a place in the Washington, D.C. area and want to make an offer. But in the midst of a challenging seller’s market, you’re likely to encounter several other equally motivated buyers who are willing to put in well over the asking price.
Thankfully, you don’t have to navigate this process alone. Working with an experienced Washington, D.C. real estate agent is one of the best ways to ensure you are putting in competitive offers and positioning yourself for success if you get into a bidding war.
While your realtor can help walk you through each step of the process, here are some tried-and-true strategies you can keep in mind before you embark on the house-hunting journey. Following these guidelines can help set you up for success along the way.
Before you start the house hunting process, getting pre-approved for a mortgage is a good idea. That way, you’ll know exactly how much you can afford to spend on a home. Once you find a place you want to make an offer on, you will already have all the necessary documents to back up your ability to follow through with the offer. This helps the seller know that you are serious about buying the property and that you have the financial means to do so.
Getting pre-approved before looking at Washington, D.C. real estate can save you valuable time and effort in the long run and position you for the optimal outcome. Your realtor can recommend trustworthy loan agents to work with as you get pre-approved, so be sure to ask them for recommendations if you’re not sure where to start. Once you’re pre-approved, you can ask your lender to write you a letter you can show to sellers to let them know you have already been approved for the buying process.
Make an all-cash offer
While it’s certainly not possible for everyone, making an all-cash offer is another great way to put yourself ahead of other offers. Because cash offers aren’t contingent on a lender approving a mortgage, they can help the seller feel confident that the deal will go through as planned.
The reality is that most people don’t have enough money saved up to put down an all-cash offer, especially in bigger cities where the market is more competitive. Because of this, some people consider liquidating retirement accounts such as 401(K) accounts to get themselves this competitive edge. However, liquidating a retirement account isn’t always the best financial decision, so it’s ideal if you don’t have to take such a drastic step.
Be sure to weigh all the options to determine which one is right for you. Consult a financial advisor for expert guidance. If you don’t have the money upfront to make an all-cash offer, don’t despair. There are still several other ways to win a bidding war without risking your retirement accounts.
Go in with a strong offer
In such a competitive market, you’ll likely need to offer above the asking price to set yourself up for success. Before making an offer, run the numbers to see what you can comfortably and realistically afford to pay each month. Confer with your real estate agent to see what similar houses in the local market are selling for to determine what your opening offer should be. And remember that sometimes — despite your best intentions — it may be necessary to walk away if you simply cannot afford the home. If you’re outbid, rest assured that you’ll be able to find another house down the road that aligns with your needs without breaking the bank.
Include an escalation clause
The seller will need to provide proof that there was actually a higher bid offered by another buyer to get that difference. This can be an effective way to mitigate the risk of getting outbid. Work with your realtor to ensure that the proper escalation clause goes into your offer if that’s an avenue you want to pursue.
Pay seller costs
Traditionally, the seller pays the realtor around 5%-6% of the final sale price as commission fees. If you want to give them extra incentive to choose your offer, consider offering to pay those seller costs. This can be an appealing proposition for many sellers and may inspire them to choose your offer since they will save money on the transaction.
Be flexible on the move-in date
Don’t lose hope
If you’re trying to buy a home in Washington, D.C. real estate, contact Larry and Richard Prigal at Prigal Brothers & Associates today. With over 50 years of combined real estate experience, the team is well-equipped to answer any questions you may have about the local market, write up a competitive offer, and guide you through negotiations so you can find the home of your dreams.
*Header photo courtesy of Pexels