I haven’t posted anything business-related in a long time. But, as a real estate investor, I think it’s fitting to talk about some signs that the seller will accept your offer on a home in this CRAZY seller’s market.
What is Going On With the Real Estate Market Anyway?
Anyone who hasn’t been living under a rock for the past few years knows that the real estate market has been psycho. People across the country have contended with fierce bidding wars for properties (or have abandoned their home searches altogether). Prices have shot sky-high, and in many markets, the year-over-year appreciation has been staggering for those fortunate enough to already own properties.
I’m not an expert analyst, so I’ll defer to the professionals for an answer on the “why” behind all of this madness. Here is what we know in a nutshell (according to realtor.com):
- COVID-19 drove up demand for housing. Why? Well, I’m speculating a bit here, but I think the emphasis on social distancing and fears surrounding COVID prompted people out of high-density housing and into more solitary living arrangements. Further, the increase in remote work probably played a role. Once people realized they could work from home, they wanted to work from a cozy place, not a rental or apartment. They may have also decided to do some “geographical arbitrage” by relocating to rural (safer) areas but continuing to rake in the big bucks from their city salaries. These individuals realized they could afford much nicer homes in smaller metros, so they started to disperse and outbid locals competing for the same homes. The result? A perfect housing storm.
- The lowest interest rates in history. Despite all of this activity in the housing markets, interest rates remain historically low. Did you know that rates hit a whopping 16.64% in 1981? Crazy! With the current numbers, loans are cheap, and everyone is scrambling to take advantage.
- Low inventory. This is just supply and demand economics at work; the less there is of something desirable, the more people are willing to pay. Since the number of homes on the market has contracted so dramatically, people are wiling to pay more to buy what they want. And thanks to high salaries, favorable lending conditions, or gifts from mom and dad, people have the ability to pay more. The signs that the seller will accept your offer are more relevant than ever now with this level of competition!
Now, we’ve set the stage for this wild west market. We know that the competition is fierce and we understand why (to an extent). But what does this mean for you as a buyer? How will you be able to tell if your offers are well-received?
Signs That The Seller Will Accept Your Offer: What to Watch For
Just a disclaimer: predicting human behavior is obviously NOT a perfect science. A seller could display all of the following signs and still reject your offer, or they could display none of them and choose to work with you. That said, I’ve bought and sold a lot of houses, and I’ve observed these signs that the seller will accept your offer quite a few times. So, if you see one or more of these indicators, you might have a shot at success!
Sign #1: Asking for Clarification
It may seem inconsequential, but if the seller or the seller’s agent reaches out to ask a clarifying question, that’s a promising sign that they’re evaluating your offer. Competition for homes these days is so fierce that some offers barely get a second glance. In some cases, you won’t know that your offer has been rejected until days after the seller has accepted another offer (simply because there are so many offers to respond to. Anecdotally, I know of a local home seller who received more than 80 written offers on his home!)
If you receive questions about your timelines, purchase price, contingencies, or anything else you’ve stated in the offer, take this is a good indicator that the seller is thinking seriously about your proposal.
Sign #2: Asking for Proof of Funds/A Pre-Approval or Pre-Qualification
A good agent will submit your financial documents with your offer so that the seller doesn’t even have to question where the money is coming from. However, if the seller has further questions or wants to see additional documentation, they may instruct their agent to request more information. This step is among the signs that the seller will accept your offer because it indicates that they’re interested in your terms. Pro tip: have these documents ready to go so that the seller doesn’t have to wait. You don’t want to create uncertainty in their minds by taking too long!
Sign #3: A “Soft” Counteroffer
Sometimes, a seller’s agent will contact your agent with what I call a “soft” counteroffer. This conversation could be super casual; something along the lines of: “Hey, we received your offer on [address]. My client likes the quick closing timeline, but they’re wondering if your client would be willing to increase the purchase price. Please let me know.”
When I receive correspondence like this, I assume that I am neck and neck with another offer. The seller really likes what I’ve proposed, but they can’t quite get past this one (or possibly multiple) sticking point(s). If you can negotiate, this is the opportunity to do it!
Keep in mind that a “soft” or verbal counteroffer is NOT an official counteroffer. Nothing is official until the papers are signed. So while this is a promising indicator, don’t assume you’ve won until the deal is done.
Sign #4: Hearing Directly From the Seller
This is rare in transactions involving agents. But occasionally, a seller may want to speak directly with a prospective buyer before accepting an offer. This could happen for several reasons. Some people are deeply attached to their homes and they want to know who they’re passing their beloved property onto. Others absolutely need the sale go through in order to relocate, complete the purchase of another property, etc, so they want to feel ultra-confident about the buyer they’re working with. Some people get a thrill out of handling their own negotiations, or they just believe that they’re better at negotiating than their agent.
Whatever the case, if you hear directly from the seller with additional questions, this could be a positive sign that they’re mulling over your offer.
Sign #5: “You’re in His/Her Top 3”
I couldn’t think of a great summary statement for this situation, but it definitely deserves a spot on this list of signs the seller is going to accept your offer. I’ve had situations where an agent calls to let me know that I’m in the top 3 (or top 2 or 5, the number doesn’t exactly matter) of offers that the seller is considering.
This is not a give-in that the seller will accept your offer, but it should inspire confidence. This means you made a strong enough impression that you have a shot at getting the house. If you learn that you’re in the running, use this opportunity to strengthen your offer, if possible. Respond with something like “thanks so much for this update, I’m thrilled to hear that. Can you please let me know if there’s anything I can do to make my offer more appealing?”
People are often surprised to realize that agents will respond to questions like this. In most cases, they won’t outrightly provide the specifics of other competing offers, but they will often give you pointers on how to make yours better. After all, it’s their job to bring the best buyer to their client.
House searching can be frustrating, regardless of market conditions. I hope these signs that the seller will accept your offer were helpful to you. If you’re in the midst of a house search, don’t give up! Like dating, job searching, and other worthwhile life pursuits, rejection is part of the process. Every “no” gets you closer to a “yes”! 🙂
PS – Above all, the best way to get your offer accepted is to make it stand out in the first place. I’ve bought and sold 30+ residential and commercial properties, so I know a thing or two about writing strong offers. If you’d like to see a post on how to write a strong offer, let me know in the comments!