When homes for sale are limited and many buyers are competing, bidding wars can become common. Buyers trying to purchase before mortgage rates rise further can add to that competition.
A National Association of Realtors (NAR) report cited in the original version of this article found that homes nationwide received an average of 4.8 offers per sale, with competition varying by state. The same report found that the average buyer made two offers before getting a third offer accepted. Those figures describe the report’s findings, not a standing expectation for every market.
The practical takeaway is simple: when a seller has several offers, you need to think carefully about yours. Price is one consideration, but your deposit, down payment and terms can matter, too.
A trusted real estate professional should guide your offer strategy. Here are the main options to discuss, along with the questions that can help you decide which ones fit your situation.
Start With Your Budget and Local Market
Before deciding how to compete, get clear on what you are comfortable spending. A stronger offer should still fit your budget and be realistic for home values in the area.
Your real estate professional can help you understand what sellers are looking for locally and which parts of your offer may deserve attention. The goal is not to pull every available lever. It is to choose the ones that make sense for you.
Keep these questions in front of you as you review your options:
- Is the offer price within my budget?
- Is it realistic for the local market?
- Am I comfortable with the money I am committing?
- Which conditions do I need to keep in place?
Consider Offering Above the Asking Price
Price is often the first thing buyers think about when they want to make an offer more appealing. When there are more buyers than homes available, more homes can sell above the asking price.
Offering more than another buyer may help your offer get accepted. Bankrate makes that point while also noting that the increase may not have to be large. The amount depends on the area and other factors, so local guidance matters.
That does not mean you should automatically offer more simply because there is competition. Keep your budget and the home’s local market value at the center of the decision.
Ask your agent whether an above-asking offer makes sense for the property and how they arrived at that recommendation. Use that conversation to choose a price deliberately, rather than reacting to the pressure of a bidding war.
Discuss a Larger Earnest Money Deposit
An earnest money deposit is money you put forward with your offer, described in the original article as a check accompanying it. If your offer is accepted, that deposit is credited toward your home purchase.
NerdWallet describes a typical earnest money deposit as 1% to 2% of the purchase price, while noting that the amount varies by location. It also explains that a higher deposit may catch a seller’s attention in a competitive housing market.
A larger deposit can show that you are serious about the house and have already set aside money you are ready to put toward the purchase.
Before choosing an amount, talk with your real estate professional about what is appropriate in your area and whether this option fits your situation. The useful question is not simply, “Can I offer a bigger deposit?” It is, “Is this a sensible way for me to strengthen this offer?”
Evaluate Whether a Higher Down Payment Fits
Increasing your down payment is another option to consider. The basic benefit is straightforward: a higher down payment means you do not have to finance as much of the purchase.
That may help the seller feel there is less risk of the financing or the deal falling through. If competing buyers are putting less down, a higher down payment could help your offer stand out.
Still, treat this as an option to evaluate, not a requirement for competing. Review the amount you are prepared to put down and discuss whether changing it makes sense for your purchase.
When reviewing your offer, consider the earnest money deposit and down payment separately. Ask your professionals to walk through both amounts so you are clear about what you are proposing.
Strengthen the Terms, Not Just the Price
You do not have to focus only on the financial parts of the offer. As Realtor.com explains, sellers also consider the buyer’s terms and contingencies, pre-approval letters, appraisal requirements and requested closing time.
That gives you several areas to review with your agent. Ask what the seller is looking for and where your own plans allow flexibility.
Look at Timing
Flexible move-in dates are one non-financial option. Your requested closing time is also something a seller may weigh when comparing offers.
Talk through the dates you can realistically accommodate. If there is room to be flexible, ask your agent whether that flexibility could make your offer more appealing to this seller.
Review Contingencies Carefully
Contingencies are conditions you set that must be met for the purchase to be finalized. An offer with fewer contingencies may be another way to compete.
For example, you could consider making an offer that is not contingent on selling your current home. Whether you should do that is a question to discuss with your professional, not a step to take simply because other buyers are involved.
Do not treat every contingency as something to remove. The original guidance specifically cautions against giving up important protections such as your home inspection. Review each condition carefully before deciding what you are comfortable changing.
Build an Offer That Fits Your Situation
Your available options can vary from state to state. A local real estate professional can help you understand what sellers value and which choices you may or may not want to make.
Before your next offer, write down your price limit, proposed deposit, down payment and timing flexibility. Then review the full offer with your agent, including the contingencies you want to keep.
Reach out to Ed Parcaut to discuss the mortgage side of your purchase and how your financing plans fit the offer you are considering. Bring your questions so you can take the next step with a clearer plan.
