Financing a Dream Property In a Competitive Market

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Luke Martin
Luke Martin
I am Luke Martin, a writer who loves homes. My words are about creating comfy and nice living spaces. Let's explore ideas for decorating and making homes cozy together. Join me on this journey to make your house a special place to be.

Even in the most luxurious markets, the data is fairly clear – cash offers are up, and cash offers are king. While many people achieve their dream of buying a luxury property that is perfect for their families using a mortgage loan, the way that the prolonged seller’s market has worked out during 2020, 2021, and even 2022 has resulted in multiple offers on many of those dream properties. If a seller receives a cash offer, they don’t have to wait for the property to appraise, which is an attractive option to them.

With these conditions, though, how do you make your financed offer the best it can possibly be? Here are some pieces of guidance that might really put your offer over the top.

Find an Agent With Neighborhood-Level Knowledge

One of the first ways to make your offer competitive is to have an agent who has seen a lot of successful deals happen in this market. In areas with specific pockets of luxury homes, like the Houston, TX markets, you’re much more likely to know what a seller is expecting if your agent is well-versed in things like how much over asking most homes are selling. They can advise you on ways to make the offer attractive given the local real estate law as well as conventions of how buyers typically make themselves stand out.

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Put Earnest Money Behind Your Offer

While earnest money has often been a small portion of the purchase price, delivered with the offer to show sincerity, many competitive markets are seeing higher earnest money amounts than in the past. By increasing your earnest money, you make it clear that it will impact you more adversely to walk away from the deal. Some agents are noting a rise in earnest money offering as a way to compete and attempt to beat a cash offer, if one appears.

Appraisal Contingency Waivers

If you worry that a cash offer will be a challenge to beat, one option is to offer to pay a certain amount above what the appraisal states is the value of the home. Some people simply waive the right to back out of the deal in the event that the appraisal comes in low, which can make it seem like more of a done deal. It’s important to talk through your finances and make sure that an appraisal contingency waiver (or any other contingency waiver) is right for you; it’s not enough to just be competitive if you take away an important option, like leaving the deal if the home doesn’t appraise, in your financial picture.

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Quick-to-Close Offers

Many agents will encourage you to move forward as quickly as possible toward closing as you can, with the amount of days till closing as a selling point for those sellers. If you know you’re working with a lender who can close a deal in 30 days or less, you’re likely to appear more competitive as an overall offer than, say, someone who wants a contingency that they need to sell their own house first. The faster you can move, the more quickly the seller gets their money and is finished with the property, which can be a helpful possibility.

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