How to Get an Offer Accepted in Today’s Market 
Our current inventory of homes is very low.  In most cases, within just a day or two of listing, there are multiple offers received, and the window for submitting an offer slams shut.  The first time or two, Buyers think it’s a fluke and will likely submit a list price or lower than list price offer.  However, after a few rejections, this can become frustrating.

So what is happening with offers?  Sellers are looking for the highest “net” offer.  This means the buyer who does not ask the seller to pay for closing costs, a home warranty, or repairs, and offers over list price is in a better position to have their offer accepted.  Buyers willing to pay HOA & tax transfer fees, will increase their “net” offer, making it more attractive to a Seller.  (Remember, you can always purchase a home warranty, paying for it yourself, instead of asking a Seller to pay for it.)

What else helps you get an offer accepted? CASH!  If you have to finance, sellers are now asking that you waive your appraisal contingency.  This means that you will pay any difference between the appraised value (which the bank will use to calculate your loan) and the agreed sales price.  For example, if you offer $175,000 for a home, and it appraises for only $150,000, you would need to pay, out of pocket, $25,000 in addition to whatever down payment is required by your lender.  That’s a pretty tough idea to accept, but Buyers are doing just that every day.  Why?  Because otherwise their offers are getting rejected in favor of higher net offers.  Buyers who already own a home, might consider taking equity out of their current home in order to make a cash offer on a second home.  

Remember, “terms” matter as much as price.  One of the reasons cash offers are so attractive to Sellers is that they can typically close within a matter of days, versus the month or more that a lender requires.  They also know that a “pre-approval” is not the same as a fully approved Buyer.  Since a deal can be cancelled, up to the very last minute, by a loan denial, Sellers will look at mortgaged offers as a “possible sale”, not a definite sale.  Therefore, if you need to use a mortgage, it is best to have your lenderfully approve you prior to submitting an offer.  This will make you less of a risk to the Seller.

Also know that various loans are not equal in the eyes of a Seller.  In order of preference, Sellers tend to favor conventional loans most, followed by FHA, and lastly VA.  What’s the difference?  Honestly, there is more of a difference than you might think.  Let’s take a look at what your loan means to a Seller:

Conventional Loan:  Usually means the Buyer has more cash on hand, and will be better able to waive any appraisal contingencies.  No rules mandated about who pays for what as far as fees are concerned.  Does not require a stringent inspection of the property by the lender.  It is possible for a conventional loan to close in as little as 10 days, butONLY if you have previously submitted everything your lender requires, and have gotten underwritten approval as a Buyer.  Note:  Not all lenders can close this quickly, however I do have a few that can, indeed, close in 10 days.

FHA Loan:  Often means a first time Buyer, who can be caught off guard by the fees involved in buying a home.  Some Buyers have gotten all the way to a final signing, only to discover that they do not have the money, required to be paid by them directly, in order to close.  An FHA loan also requires an inspection, which can turn up items that the lender demands be repaired PRIOR to closing.  These things can be as simple as installing water heater straps, or as complicated as requiring a new AC system.  Since cash buyers are usually willing to purchase “as-is”, Sellers often refuse to make any costly repairs in order to please a lender, which results in the Buyer not being able to get a loan on the property.

VA Loan:  Requires a very thorough inspection, and requires all repairs be made & re-inspected before the loan can be approved.  The VA also mandates which fees can be charged to the Buyer, all other fees, regardless of who traditionally pays, are charged to the Seller; this is the biggest stumbling block to getting a VA backed offer accepted.  A VA loan can also take a bit longer to close.  Very few Sellers right now will even consider a loan that involves a VA loan; as they are almost guaranteed to get an offer that would provide a higher net and a faster close than a  VA backed offer.

When you lose an offer on a home that you really want, it’s easy to think that the listing agent has a special relationship with the buyer’s agent, or that there was some sort of side deal in place.  But that’s simply not true.  The truth is, Sellers are receiving above list, high net offers, often in cash, on just about every home out there.  To have an offer accepted in today’s market, you need to be competitive.
Until a deal actually closes, we have no way of knowing the final sales price, however, once the sale closes, if we look at the records, we  almost always see that the winning bid was, honestly, better than the offer that was rejected.

Sometimes buyers lose a deal over a few hundred dollars, sometimes a few thousand, and sometimes the winning bid might actually be lower, but the “terms” were more attractive to the Seller.  Buyers often tell me “I would have beaten that offer!”  But hindsight is 20/20; there is simply no way to know what other offers are on the table, so there is no way to “beat” another offer.  Especially, since Sellers are receiving several offers, they are often not even bothering to send out multiple counter offers; they are simply selecting the best offer they received, and if countering, doing so only with that Buyer.  The best advice?  If you see a house that you really want, go all in and offer what you can truly afford with no regrets afterwards if your offer wasn't accepted. 

We don't expect any change in upcoming inventory over the next few months, in fact with so many Buyers in the market right now, inventory may get even tighter.  It's only going to get harder to find a home.  So when you see a home you love, be prepared to write your offer immediately, and make your first offer your "highest and best" offer, as you will likely not get a chance to adjust your offer.