How to Write a Competitive Offer

When multiple buyers want the same home, your offer needs to stand out. Here's how to compete effectively while protecting yourself.

Understanding the Competition

In a competitive situation, sellers evaluate offers on:

1. Price - What you're offering to pay
2. Terms - How easy and certain the transaction will be
3. Timing - How well it fits their needs
4. Risk - How likely the deal is to close

Price isn't everything. A higher offer with more risk might lose to a lower offer that's more certain.

Strengthening Your Offer

Price Strategies

Offer above asking: In competitive markets, expect to offer above list price. Use comparable sales to guide how much.

Use an escalation clause: Offer to beat competing offers by a set amount up to a maximum:

• "I'll pay $2,000 above the highest offer, up to $365,000"
• Requires proof of competing offer
• Sets your ceiling clearly

Round numbers vs. odd numbers: Some agents suggest $352,000 instead of $350,000 to edge out similar offers. Small impact, but easy to do.

Earnest Money

Higher earnest money signals commitment:

• Standard: 1-2% of purchase price
• Competitive: 3% or more
• Shows you're serious
• At risk if you default (not exercising contingencies)

Down Payment

Larger down payments reduce lender risk:

• More likely to appraise successfully
• Suggests stronger financial position
• Conventional buyers sometimes preferred over low-down-payment loans

Contingencies

Fewer contingencies = stronger offer, but more risk for you:

Inspection contingency:

• Standard: Keep it, adjust timeframe
• Competitive: Shorten to 7-10 days
• Aggressive: Waive entirely (risky—not recommended for most buyers)

Appraisal contingency:

• Standard: Keep it
• Competitive: Offer to cover gap up to $X
• Aggressive: Waive entirely (must have cash for any gap)

Financing contingency:

• Standard: Keep it
• Competitive: Shorten timeframe, show strong pre-approval
• Cash offers eliminate this entirely

Financing Strength

Make your financing look solid:

• Get fully underwritten pre-approval, not just pre-qualification
• Use a reputable, responsive lender
• Have your lender call the listing agent directly
• Show proof of funds for down payment

Timeline Flexibility

Match the seller's needs:

• Need a quick close? Be ready to move fast
• Seller needs time? Offer a longer escrow
• Seller needs to stay? Offer a rent-back period

Ask your agent to find out what matters to the seller.

Clean Offers

Keep it simple:

• Don't ask for seller concessions
• Don't ask for personal property (furniture, etc.)
• Don't include unnecessary conditions
• Use clean, standard contract language

What Not to Do

Don't Overextend

Getting a home isn't worth financial disaster:

• Don't waive contingencies you can't afford to lose
• Don't offer more than you can appraise or afford
• Don't skip inspection on a home that needs one

Don't Get Emotional

Easy to say, hard to do:

• There will be other homes
• Winning a bidding war you regret isn't winning
• Step back and evaluate objectively

Don't Insult the Seller

Low-ball offers in competitive situations waste everyone's time. Know the market and offer appropriately.

Working with Your Agent

Your agent should:

• Research what comparable homes have sold for
• Find out what matters to the seller
• Present your offer professionally
• Advise on strategy for this specific situation

Different situations call for different approaches. Cookie-cutter strategies don't work.

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Ready to make an offer? Contact Greg Franklin or call (559) 816-7780 to discuss strategy.