7 Strategies to Win After an Open House
Attending an open house can be a great way to view a home in a casual, low-pressure way, but it also comes with some risk. After all, an open house is a public event — and it can often mean coming up against serious competition.
Fortunately, there are ways to stand out from the pack.
Did you find a home you love at an open house? Want to make sure you win out against other bidders? Here are seven ways to do it.
1. Be the first offer on the table.
Acting fast is critical if there are others gunning for the property. If you leave an open house knowing it’s the one, ask your agent to put in a bid as soon as possible. This will help you stand out in the seller’s minds — especially if it’s a strong offer.
2. Make a big earnest money deposit.
Earnest money is the seller’s to keep if you pull out of the transaction (due to inspection issues, mortgage problems, etc.). So the more you offer, the more secure sellers will feel in your bid — and the more tempting it will be.
Ask your agent for advice on how much you should offer for your area. And make sure they know how much you want that open house, too. Your deposit should reflect how serious you are about the property.
3. Come fully approved.
Having a mortgage pre-approval is a good place to start, but if you can get a fully underwritten approval — one that requires documentation and all the works — then you’re even better off. An underwritten approval means your loan is all but closed. You only need a property address and an appraisal, and the mortgage is yours.
To sellers, an underwritten approval says you’re a safe bet — that your offer won’t fall through due to financing issues and that the sale will be smooth sailing from start to finish.
4. Include an escalator clause.
Offering more than the home’s listing price is smart when there’s high competition. But just how much do you offer? You don’t want to offer too much and end up overpaying for the house, nor do you want to underbid and lose out on your dream home.
Including an escalator clause in your offer is a good alternative. These gradually increase your bid if another buyer comes in higher. Essentially, you set a maximum your bid can reach, and your bid increases X amount each time you’re outbid.
For example: Say you bid $350,000 on a house but include an escalator clause for $5,000 increments up to $400,000 maximum. In this case, if another buyer comes in with a $355,000 offer, your bid would increase to $360,000. If they come back with a $365,000 offer, yours would increase to $370,000 and so on (as needed) until your $400,000 maximum.
5. Waive some contingencies.
Contingencies make things harder for sellers. A mortgage contingency, for example, says you can back out of the deal if your loan falls through. An inspection contingency does the same but is based on inspection findings. There are others, too, but each one means more potential risk for the seller and a higher chance they’re back at square one just a few weeks down the road.
Talk to your agent about which contingencies are smart for your specific case and which ones you might consider waiving. Doing so could put your offer ahead of others from the open house and help you win the deal.
6. Choose a good agent.
A great agent can make or break you when competition is stiff. First, they need to be responsive and quick on the draw. If you attend an open house and find the one, they’ll have to draw up and submit an offer ASAP to ensure you’re noticed.
They also need to be responsive during negotiations. When there are lots of offers on a house, things can move very quickly, and if they’re not by their phone or responding to counteroffers within a few hours, someone else can swoop in and win the home.
7. Include an appraisal gap guarantee.
If you don’t want to waive contingencies, an appraisal gap guarantee can be smart to include. These tell the seller that if the home fails to appraise for your full offer, you’ll make up the difference out of pocket. This reduces the chance that your deal falls through — particularly in a hot market where homes are selling for much more than they’re worth.