How to Write a Winning Offer on a Hot Home

The Seattle housing market is undoubtedly hot; the average days on market is eight days, and all the stories you’ve heard of insane bidding wars are true.

So how do you write a winning offer? In short, sellers are looking for the highest offer with the least amount of contingencies, preferably none. Wait, what’s a contingency? It is a way for the buyer to back out of the deal. For example, an inspection contingency let’s the buyer back out of the deal if after inspecting the home you decide you don’t want to proceed. The seller then needs to put their home back on the market. Sellers, in this market, have all the power, and prefer an offer the buyer can’t back out of.

Elements of a winning offer stolen straight from our home buying guide:

Strong price: It’s not always the case, but the highest price often wins. While the listing price gives us a starting point, we’ll determine what we think the home is worth in the current market based on recent comparable sales. We’ll also gauge how much competition you may be up against by calling the listing agent and asking how many offers they’re anticipating.

Include an escalation clause: In a competitive situation, we will add an escalation clause to your offer. What this does is automatically increase your offer price if someone offers more than you. You’ll specify what your initial offer price is, your maximum offer price, and your bid increment. For example: If you offer $500,000 on a home and you include an escalation clause, it could automatically increase your offer by say $5,000 up to a maximum price of say $580,000.

Pay cash: Of course, cash is king. A cash buyer can close faster than someone who has to finance a home purchase, and there is much less risk that the deal won’t close. Even if you’re pre-approved, there is always the possibility that your financing will fall through. Just over a third of homes in the Seattle area are purchased with cash.

Waive your financing contingency: If you can’t pay cash, the next best thing is to talk to your agent and lender about waiving your financing contingency. However, you need to be sure that you’ll get the loan otherwise you risk losing your earnest money.

More earnest money: Earnest money demonstrates that you are serious about buying the home. This is usually 3% of the purchase price that you pay within two days of your offer being accepted. You can increase the strength of your offer by putting down more earnest money or, if you’re REALLY serious, making a portion of that earnest money immediately nonrefundable or releasing all of, or a portion of the earnest money to the seller.

Get the home pre-inspected: Typically, your offer would be contingent upon an inspection of the home by a licensed inspector. But in today’s hot market, we recommend inspecting the home BEFORE making an offer so that you can waive your right to inspect. This is known as a pre-inspection. This is why you want to see homes as soon as they hit the market because we’ll only have a few days to get an inspector into the house before making an offer. Now, unlike in a balanced market, you won’t be able to request repairs from the seller. Instead, you’ll have the benefit of understanding the condition of the home before writing your offer.

Review the title ahead of time: Some listing agents make a preliminary title report available for review. The title report identifies all parties with a legal claim to the property, indicates what items need to be cleared from title before the buyer can take possession, and identifies whether there are any easements or encroachments on the property. If you and your agent can review this ahead of time and waive the contingency that requires a title review, you should.

Strike clause “x”: The purchase and sale paperwork includes a “Information Verification Period and Property Condition Disclaimer”. In multiple offer situations we strongly recommend striking this.

Write a letter: it never hurts to write a letter to the seller expressing why you think you’ll be a great fit for their home.

There are a few other tactics we at Urban Living can use to help you buy your dream home, but we don’t want to give away all our secrets!

Don’t want to get caught up in a bidding war? Check out all the homes on Redfin over 14 days.