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Cover story: Strategies shift as buyers again face competition
Some buyers also offer an escalation clause, which automatically establishes a higher offer above a particular threshold.
“We’re not seeing as many escalation clauses these days, though, because of the concern that the appraisal won’t match the new sales price,” Ms. Hooks said.
Mr. Moraru said buyers are better served by offering a price above the list price rather than using an escalation clause.
“If you have a good sense of where the house price will end up, it’s better to just offer that rather than make a lower offer and plan to escalate,” he said. “In order to determine the price you should offer, you should ask yourself: If you lose this house at this price, how will you feel? If you win the house at the maximum offer price, how will you feel? If you’ll feel like you overpaid, then you did.”
Mr. Bolin said buyers need to be careful not to push past their maximum housing budget.
“Sometimes a Realtor can help buyers avoid overpaying for a property, but sometimes couples will push and pull themselves to avoid getting overexcited and offering too much,” Mr. Bolin said.
While having stellar financing and a good knowledge of home values and the seller’s desires are all important to buyers in a competitive market, Ms. Hooks said sometimes the simple step of writing a nice letter to the sellers about why you love their home can be enough to push your offer past those of other buyers.
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