The market in Philadelphia and the surrounding suburbs is extremely competitive for buyers right now. Low mortgage rates and first-time home buyer incentives are mobilizing people to purchase a home, but inventory remains low. We have seen homes sell first day on the market, homes sell for over asking, and bidding wars (homes with multiple offers from buyers.) In a nutshell, people want to move, but snagging a home you love is challenging. Philly Home Girls agents implement several strategies so you can make educated decisions when, or if, the time comes to get competitive.
Be prepared to make quick, confident decisions
All decisions are yours to make during the home buyer process. From the beginning, PHG agents are empowering you with a deep understanding of exactly what you’re getting into, how to prepare, which decisions impact negotiations, and where all the pieces fit together.
We’ll help you discover if homes comparable to the ones you’re interested in have sold for list price, more or less, how frequently they become available, how fast they sell, and whether or not sellers are assisting their buyers with concessions. Equipping you with this information will help you make a confident decision when you are putting together a competitive offer.
Have your financial ducks in a row
Your lender’s reputation could make or break your offer especially if you’re using specialized buyer incentives like the First Front Door Grant or the Neighborhood Opportunity Zone loan program. We have a list of preferred local lenders to help! Before we tour properties together in person, your lender will set you up to make competitive offers by issuing a sturdy, well-documented mortgage pre-approval that accompanies your Buyer's Financial Information Form. Because your agent and lender owe you confidentiality, it’s important for you to disclose certain financial details that can make you appear as attractive on paper as a cash buyer.
Know the inventory
Knowing the inventory within your search requirements will give you a better sense of knowing which house is worth fighting for and if your fellow competition is perceiving its value the same way you are.
Make asking, over asking, or escalating offers
An escalation clause is a Pennsylvania Association of Realtors-approved tactic. This document allows your offer price to exceed a similar competing offer by an amount you choose up to a cap you set. For example, you make a full price $250,000 offer on a house, but your escalation clause tells the seller you’ll pay $2,500 over a similar offer up to $275,000.
The education you received at the initial consultation will help you understand your original offer’s down payment and monthly costs, and by how much your escalation clause increases those amounts.
Like any tool, there are right and wrong ways to use this one. Every deal is different, which is why having a trained and experienced agent in leveraging this approach will maximize its benefit.
Use the terms of the Agreement of Sale to strengthen your offer
What is negotiating? If it’s convincing an opposing party to change their beliefs and agree to your terms, then forget about it. Instead, lean into the Agreement of Sale (AOS). This 13 page document was authored by the Pennsylvania Association of Realtors for use by REALTORS ® across the state to negotiate and navigate the transfer of real estate from one person to another.
There are many terms in the AOS that you can adjust to incentivize the seller to go with your offer. Limiting or waiving contingencies or speeding up traditional timelines can all be including in this strategy.
When it comes to deposits, speed also matters
An earnest money deposit comes from the buyer and goes into an escrow account at the seller’s brokerage. These funds are designated exclusively for the real estate transaction and are protected by a law stating they can’t be commingled with other funds. That means the brokerage can’t use your money for payroll or pizza.
You won’t pay a deposit until your offer is accepted, but you’ll tell the seller how much you are willing to pay as part of your offer. The amount of money, as well as when you pay it, all can be adjusted to express your motivation in a bidding war.
If you back out or the deal falls through for a reason not covered by contingencies, the seller gets to keep this money. However, if you have an inspection contingency in your AOS and you don’t like the house after the inspection for any reason whatsoever, your deposit is released back to you upon signature by both parties.
Compete with cash buyers even if you are getting a mortgage
First and foremost, you need to be strong financially by having a high credit score, low debt, and a history of consistent employment in order to use this strategy. If this isn’t you, skip this one.
The financing contingency allows you to be released from your purchase contract if you are denied the specific mortgage you and the seller agreed that you’d be applying. An experienced agent can help you waive your financing contingency without the risk of losing your deposit.
Write a love letter
Be careful with this. In a lot of states, it’s not a legal practice because it sets the seller up for possible discrimination lawsuits. If you’re telling the seller how much you love the house and how perfect it is for your specific needs, your offer should reflect the same. Mentioning your amazing credit score, how much financial help you can get, how you’ll cover an appraisal issue, and or how you’ll buy it even if it’s haunted by a hoagie eating ghost are all acceptable in a love letter.
And finally, Lean on your Realtor’s expertise! If you have questions about the current market, what is happening with showings, inspections, or interest rates, we are only a zoom, text, or old fashioned phone call away!
Finding yourself peeking at properties for sale but it feels like a betrayal to your first home? Here’s how to navigate these common thoughts and questions you may have asked yourself about selling your current home and moving on to your next.