After touring houses for sale during a busy spring buying season, you finally found the perfect rowhouse in your favorite Philly neighborhood. After years of saving and several months of searching, you are finally ready to place an offer.
But in today’s seller’s market, making the right offer makes all the difference in winning or losing your dream home. To help buyers bolster their bids, the team at Prevu Real Estate compiled several tips to make your offer stand out from the crowd.
Get pre-approved for a mortgage
Sellers in Philadelphia are inundated with offers the moment they list their property. This is especially true for homeowners with turn-key properties in the most conveniently located neighborhoods.
Sellers want to close quickly, and the first step to showing you mean business is getting pre-approved for a mortgage. Philadelphia buyers need to shop around for lenders as some may offer lower interest rates on mortgage payments.
Lenders evaluate assets, income, debt-to-income ratio, existing liabilities, and credit score to figure out how much they will lend you. Getting pre-approved also shows buyers just how much capital they have to work with when shopping for homes.
Find an agent to fit your search
Purchasing a home in Philadelphia is an exciting moment for a first-time homebuyer, and an expert buyer’s agent can offer important insights when making an offer.
Finding a dedicated advocate for your search is critical as they represent your interests in the deal-making process. Buyer’s agents can help you discern what contingencies to hold onto or waive and bring hyper-local knowledge to the table.
Their transaction expertise gets buyers through the important points of the negotiation process, helping them manage the minutiae of the deal. Some brokers even offer new homeowners a commission rebate at the end of the transaction, providing much-needed capital to help cover closing costs or pay for new furnishings.
Legal in 40 states including Pennsylvania, commission rebates enable agents to reward homebuyers with a portion of their commission. For example, Prevu Real Estate gives homebuyers up to 2% of the home’s purchase price — the largest commission rebate in Philadelphia.
Remove contingencies if possible
Buyers have several contingencies to consider when making an offer on a property in Philly.
With proper caution, buyers can waive appraisal contingencies, inspection contingencies , and financing contingencies. But homebuyers beware! While removing these contingencies sweetens the deal for sellers, buyers might miss structural defects or lose out on their contract deposit if the lender doesn’t approve the mortgage.
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To help mitigate some of the risk, buyers can get a fully underwritten pre-approval from their lender before making an offer, making it easier for buyers to let go of a financing contingency. Equally, if a seller provides an inspection report from a licensed company or a buyer is planning to gut renovate the property, they can skip an inspection contingency with greater peace of mind.
Additionally, buyers that want their offer stand out from the crowd should avoid placing offers that are contingent on the sale of another property, showing sellers that they can move quickly to close.
Make offers based on value, not listing price
Some listing agents advise sellers to put their Philadelphia home on the market at a slight discount, hoping to create a bidding war where buyers furiously outbid each other. Considering the scarcity of properties, buyers should not get hung up on listing price if the home meets their homebuying needs.
Philly homebuyers can work with their real estate agent to examine historical data and look at a comparable market analysis to identify a fair value for the property. This way, buyers can make an educated offer based on value, regardless if that offer is above or below listing price.
Of course, other buyers may swoop in and make a higher bid, but this is where an escalation clause can help a buyer. Making an offer with an escalation clause allows you to automatically place a higher bid by a set amount when another interested party places an offer on a home.
But every buyer has their limit, and the escalation clause allows users to set their limit without randomly overpaying. That way, if another buyer bids over your budget, you can prudently bow out of the transaction process.
Interested in buying a home in Philly? Browse listings and see how much you can save with Prevu’s Smart Buyer Rebate.