Found Your Dream Home? 7 Tips for Getting the Best Deal
Life + Money

Found Your Dream Home? 7 Tips for Getting the Best Deal


The summer has been a hot one for the real estate market, with home prices jumping 6.5 percent in June and realtors in places like San Francisco and New York City reporting bidding wars that push prices far above ask.

Even as home prices have gone up, inventory has remained relatively tight in most markets. Total housing inventory was at a five money supply at the end of June, down from 5.1 months in May. (A six-month supply is considered a healthy market.)

Homes are selling even faster than in pre-recession years. More than a quarter of today’s sellers can unload their property in less than two weeks, according to  Coldwell Banker.

That’s great news for home sellers but it’s creating a stressful and competitive environment for potential buyers, especially as the busy summer selling season draws to a close. Follow these steps to craft an offer that stands out from the crowd and negotiate the best possible deal.

1. Have squeaky clean finances. Today’s sellers won’t even look at an offer from a buyer who hasn’t been pre-approved for a mortgage. You’ll need documentation to show that you’ve already been thoroughly vetted by a lender. (If you’re applying with a co-buyer, make sure you’re both pre-approved.) Once you’ve got that letter in hand, keep as low a financial profile as possible.

Related: 9 Real Estate Trends to Watch in 2015

Opening a new line of credit or changing jobs in the midst of purchasing a house could create issues with your lender that could hold up (or tank) your mortgage. Instead, start socking away as much extra savings as you can—you’ll need it for closing costs and other expenses that crop up during the home purchasing process.

2. Forget about the low-ball offer. The days of submitting in an offer far under the list price of a home have long since gone. Most buyers are pricing their homes closer to market value, and offers that are too far below could be viewed as insulting. The average sale-to-list price ratio is 98.5 percent, according to Housing Pulse.

In metro areas where home prices are on the rise (which is most areas of the country), making an offer at or above the list price for the property is the only way to have it taken seriously.

3. Conventional loans are the new cash. All-cash offers are still preferred by sellers, but the days when they’re on the wane. Cash offers now comprise 35 percent of home sales, down from nearly half of all deals in March 2011, according to CoreLogic.

Still, the more money you can flash upfront the better. Sellers tend to prefer conventional mortgage with a 20 percent down payment to one with an FHA loan and a down payment of just 3 percent. “A bigger down payment makes you a stronger buyer,” says Zillow’s real estate expert Brendon DeSimone. 

Sweeten the pot even more by putting down extra earnest money with your offer.

Related: Get Ready for Another Real Estate Bubble 

4. Write a letter. As cheesy as it sounds, accompanying your offer with a heartfelt letter about what the house means to you as well as a photo of your family could pay off. “Everyone has heart strings,” says Sandra O’Connor, a broker in Greensborough, N.C., and a regional vice president with the National Association of Realtors.

Most sellers won’t select your offer based solely on the letter but if yours is tied with another, the letter could give you the lead.

5. Respond quickly. Responding quickly and completely to everything the seller asks will show that you’re serious about the property and could give you another small advantage over the competition. If you’re buying the property with a spouse or partner, designate one person the realtor’s contact and authorize him or her to make quick decisions for all buyers whenever possible. “You don’t want to sit on it for a day or be the last one to respond if there are multiple bids,” says Danielle Moy, a Coldwell Banker real estate agent in Chicago.

6. Be OK with walking away. It’s easy to get swept up in the frenzy of a hot market, but you don’t want to end up in contract and then worry that you’re overpaying for the property. A quarter of homeowners surveyed by RedFin last year had buyer’s remorse, reporting that they wouldn’t repurchase the home that they live in.

Before negotiations start come up with a purchase price that you won’t go beyond and stick to it. “Then go in with the understanding that if someone pays $1 more than that price, you’ll be OK with that,” says Scott Tamkin, an agent with Keller William Realty in Los Angeles.

7. Keep looking through the fall. Fewer people look to buy houses in the fall, so you’ll have less competition. Plus, sellers who weren’t able to find buyers in the summer or who have been forced for some reason to list their home in the off-season may be more willing to entertain your offer. Plus, with interest rates poised to rise, waiting to buy until next summer could end up making a purchase far more expensive.