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Winning A Bidding War in Austin’s Market

Wednesday, January 31, 2024

Primary Blog/Winning A Bidding War in Austin’s Market

Winning a Bidding War in Austin’s Real Estate Market

The Austin housing market is highly competitive at times and when in a seller’s market, you must know how to make your offer stand out. Thanks to Austin's thriving economy and many recreational offerings, it has become a highly desirable place to settle.  Beating the offer amount, having a short option period, and offering a leaseback option are all ways to make your offer stand out from the rest. Throughout this article we will discuss these and other strategies to make an offer more attractive to a home seller.

Consider Beating the Offer Amount

In a highly competitive sellers’ market, you need to be smart about your offer amount. If you really like the property and can see your family living there for many years, it may be worth considering paying above the asking price. The asking price represents the ideal amount the seller aims to obtain for the property, which is also the listed price on the market. That seems like an obvious strategy, right? But how much more should you offer?

On the one hand, you want your offer to stand out and for that purpose, you are prepared to offer more for the property. However, you don’t want to pay too much more than the property is worth. Naturally, the answer to this question will vary from property to property and area to area. As a general rule of thumb, you can offer 1 – 3% more than the asking price or you can try to beat what you think the highest offer might be by a few thousand dollars.

Enhancing Your Offer: The Impact of Financing Terms and Down Payment Size

In the competitive world of real estate, distinguishing your offer in a sea of multiple bids involves more than just price—it's about strategically structuring the financing terms and the size of your down payment. Contrary to common belief, a cash offer isn't always the golden ticket to winning a bidding war, especially if it falls short of the asking price or lacks favorable terms for the seller. While cash transactions are appealing due to their speed and simplicity, often bypassing the need for a home appraisal, they don't guarantee success. To truly stand out, consider the power of a substantial down payment. This not only demonstrates your financial stability but also signals to the seller your serious commitment to the purchase.

​Moreover, securing a full pre-approval for a mortgage before embarking on your property search is a savvy move. This pre-approval letter, which is typically required when submitting your offer, reassures the seller of your purchasing capabilities. For cash buyers, showing proof of funds is equally crucial. Such financial preparedness not only positions you as a serious contender but may also be a prerequisite for property viewings. Ultimately, in the realm of real estate offers, it's the thoughtful combination of favorable terms, robust down payments, and evident financial readiness that truly makes a difference.

Consider a Short Option Period with Higher Compensation for the time off market

The option period commences once the buyer and seller have agreed upon and formalized the terms of their agreement. This critical phase allows the buyer to conduct comprehensive due diligence on the property to uncover any potential issues or concerns. Should the buyer discover any unsatisfactory elements, they retain the right to withdraw from the contract, given they notify the seller within the stipulated time.

Key activities during the option period, as outlined in the contract, include:

1. The buyer provides an option fee to the seller, granting them the privilege to rescind the contract within a specified timeframe. This fee compensates the seller for holding the property off the market during this interval.

2. This period is an opportunity for the buyer to conduct thorough investigations to confirm the property's condition. A licensed inspector can be employed to examine the property's structural integrity and check for issues related to plumbing, roofing, electrical systems, and more, ensuring the buyer is fully informed about what they are committing to.

3. Based on the inspection results and contractor estimates, the buyer may negotiate with the seller for repairs or a discount equivalent to the anticipated repair costs.

​The option period is a vital component of the real estate transaction, providing a safeguard for the buyer while offering the seller assurance through the option fee. Strategically determining the duration and cost of the option period can enhance your proposal, with a shorter period and a higher fee often being more appealing to sellers, as it reduces the time their property is off the market.

The Advantage of an Early Closing, Including Options for Leaseback

Offering an early closing date can give your offer a significant boost in a multiple offer scenario. It's all about convenience and peace of mind for the seller. A quick close means they can access their funds faster, avoid the stress of potential snags over a protracted period, and save on ongoing property costs. Plus, in the thick of a bidding war, signaling that you're ready to wrap things up swiftly can make your bid the more attractive choice. It shows you're serious, well-prepared, and considerate of the seller's circumstances. Just make sure your financing is solid and you're ready to move quickly. This approach not only simplifies the process for the seller but also positions you as a standout buyer in a crowded field.

Providing a leaseback option is an appealing strategy that can significantly enhance the attractiveness of your offer to a seller. In such an arrangement, known as a post-closing occupancy agreement, you, as the buyer, allow the seller to continue living in the property for a set period after the sale.

​This flexibility affords the seller the convenience of securing their next residence and organizing their move without the pressure of an immediate deadline. This aspect is particularly beneficial for sellers who have lived in their home for many years and require ample time to sort and transport their belongings. For older sellers, or those needing additional time to coordinate their next steps, the proposition of a leaseback can make your offer stand out, offering them a much-needed reprieve.

Waiving Contingencies

Waiving contingencies is another strategy some buyers will use to sweeten the deal for the seller. However, be careful when considering this option, as most contingencies are there to protect the buyer.

For instance, waiving a home inspection contingency can mean that you miss learning about serious problems with the property the buyer is purchasing, for example a costly mistake would be failing to have a house inspected that has foundation damage. Only consider waiving this contingency if you think the property is ideal for your purposes, and are in a financial position to handle any issues with the property after you take possession of the property.

Another option buyers consider waiving is the appraisal contingency however this should be done only if you are fairly sure that the appraisal won’t be too much lower than the purchase price. Be sure to talk to a local real estate agent before you do this so your agent can provide you will comps for the area. Having said that, waiving this contingency may set your offer apart from other offers.

The highest offer has the best chance of securing the sale, but a high offer that comes with many contingencies may be declined in favor of a lower but simpler offer.

Key Takeaways: Winning Strategies in Austin's Real Estate Game

Navigating the fast paced Austin housing market requires a blend of strategy, timeliness, and insight, especially during the seller's market phases where competition intensifies. Austin's allure, fueled by its dynamic economy and abundant leisure opportunities, heightens the stakes in securing your ideal home. By considering tactics such as surpassing the bid amount, opting for a brief option period, and proposing a leaseback, you position your offer to capture a seller's attention amidst a sea of contenders.

This article has laid out these and other key approaches to enhance the appeal of your offer, aiming to provide you with the upper hand in the fierce battle for your dream residence in Austin. Armed with this knowledge, you're better equipped to navigate the complexities of the market and edge closer to claiming your slice of Austin's vibrant living experience. I'm here to help you navigate through it all and get those keys in your hand so reach out today and let's make it happen!

Let Me Help Make Your Dream Home a Reality

Are you tired of sifting through endless online listings, feeling overwhelmed by the search for your dream home? I'm Kristi Metcalf, and i would love to simplify the process for you.

As a native Texan and an experienced real estate agent, I bring a wealth of local knowledge and industry expertise to the table, making your real estate journey smooth and efficient. Whether you're buying or selling, my dedication to my clients and the real estate field shines through in every interaction.

If you're in the market to buy, I pledge to assist you in finding the perfect home, maintaining transparent communication at every juncture, and skillfully negotiating to secure the best possible deal for you. If selling is on your horizon, I'm committed to helping you prepare your home for maximum value, crafting a tailored marketing strategy that highlights your property's unique attributes, and attracting a broad spectrum of potential buyers.

Throughout your real estate journey, I'm here to offer my expertise and unwavering support. So why wait? Let's embark on this exciting path together towards finding your ideal home. Contact me today to get started.

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Hi, I Am Kristi Metcalf

Realtor in Austin, TX

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