9 STEPS TO A BETTER OFFER
Let me guess, you have submitted offers on multiple homes and you still have no place to live? Or, you are finally ready to take a leap of faith and dive head first and try to buy the home you saw on Zillow or one of those other real estate internet sites (I’ll touch on this later). Whatever your situation may be, good for you! With all of this talk about it being a “seller’s market” (low inventory; there are more buyer’s than seller’s), you are throwing your hat in the ring and are determined to purchase a home.
I KNOW HOW YOU FEEL! I know how you feel for two reasons: 1) I work with buyer’s and seller’s every day of my life. 2) A few months ago my wife and I were the buyers when we purchased our home together. SO, lets just jump right into it as I share with you a few tips on how you are more likely to get your offer accepted in today’s market. NOTE: This comes from my experience as a listing and buyers agent.
Make your offer as clean as possible.
So, what exactly is considered a “clean” offer? A clean offer is an offer where you, the buyer, is not asking for anything extraordinary from the seller. For example, if you can buy the home without the seller helping you with your closing costs, don’t ask for them! Also, if at all possible, do not write it contingent on the sale of your home. I know sometimes it’s a must, but just be prepared, it will hurt your chances in a multiple offer situation, especially if the home has not been on the market for too long. However, there are a few things you can do to help strengthen your contingent offer. Email me for more detail: firstname.lastname@example.org
Waive and/or cut down your contingency period.
As a buyer you have THREE main contingencies: 1) Inspection (17 days); 2) Appraisal (17 days); 3) Loan (21 days)
As an agent, I would never advise my buyer client to waive all of their contingencies! Unless you are a seasoned home buyer and really know what you are doing, you are really taking a gamble. However, if you were to waive your contingencies, you would strengthen your offer by a ton, because you are really locking yourself in to buying that home, or there is a very good chance you lose your deposit.
With that being said, I would advise cutting them down. In the contract, you have 17 days to complete all of your inspections on the home. Depending on the condition of the home, and how competitive it is, you can probably get away with a 7 day contingency period. This should be enough time to get your inspections done.
If there is an contingency you can consider waiving it would be the appraisal contingency. You can get a pretty good idea if the property will appraise or not just from the comps. However, you should discuss this with your agent and have a plan.
If you are paying “cash”, there is no need from a loan contingency. If you don’t have the cash to drop, most likely you will be getting a loan from the bank. Depending on how strong of a buyer you are (how much of a down payment, credit score, income…etc) will depend on the certainty of you getting a loan. You and your agent should talk to your lender about anything that could possibly go wrong before you even think about removing that loan contingency…. Even if you are on day 21!
Put your best foot forward.
If you think the home will have multiple offers, I would come in with a strong offer price. I know some of you want to start low and work your way up. The only problem with this is that you may not get a chance to work your way up! AND, if you come in too low, you just piss the seller off and they may throw your offer to the side because they don’t think you are serious. If your agent can communicate with the other sellers agent, sometimes you can find out how they will do things in terms of how they will go about accepting an offer. For example, will they just accept the best offer, or will they send out a counter offer and give buyers a chance to revise they best offer. It all depends, and there is no concrete rule on how to go about it. Just don’t kick yourself in the ass if you lose the home over the $20,000 you were planning on increasing your offer to anyway.
Hold off on the “personal” property.
There are always things that you see in the home that you are going to want to stay with the home. For example, the kitchen table they have is just perfect and it’s just the style you always wanted! Or the hanging mirror in the hallway you cannot live without! Leave that type of stuff out of your offer. If you really want it, there are ways to go about it after your offer is accepted. Asking for personal items can weaken your offer, especially if your offer is similar to another offer that does not ask for that unbelievable kitchen table that the sellers grandfather made by hand and would no-way part with. Get it?
Put down a strong deposit (EMD).
If you have the available funds, put down a stronger than “normal” deposit. A typical deposit is 3% of the purchase price. If you can put down 5% or 10%. This will definitely look better to the seller and it show initiative. Don’t worry, as long as your contingencies are in tact your deposit is safe.
Make a larger down payment.
Again, if you have the funds, make a stronger down payment than what is required for the type of loan you are getting. For example, if you and another buyer offer the same price on a piece of property and both are qualified for a conventional loan, but one offer has 20% down, and the other has 30% down, the 30% down is a stronger offer because it gives the lender a bit more wiggle room incase of a lower appraisal.
Make sure your offer package is complete.
Common sense isn’t always so common. Make sure your offer package is tight! Make sure your offer is filled out in full, along with a pre-approval letter from your lender, and a bank statement (POF) showing you have the amount for your down payment. OHHH, and submit it all in ONE PDF! I can’t tell you how many times I have received offers where the agent sends me 7 separate PDF files to complete the offer package. It’s messy, unorganized, and a pain in the butt to click and save 7 different files. It’s not a good first impression.
Speaking of good first impression.
In my opinion, this may be up there with the MOST important! If you go to see the home with your agent, there is a good possibility the the listing agent and/or the seller may be there to let you in. THEY ARE LISTENING TO YOUR CONVERSATIONS! If you love something about the house, go ahead and say it, and say it loud. If you DON’T love something about the house, keep it to yourself and talk about it when you are done with the showing. Believe me, you will not get any brownie points for trashing the sellers decorative style or smashing the disgusting burnt orange paint they went crazy with in the living room…and the hallway…and the bathroom. ALSO, even when nobody is home, more and more homeowners are wiring up with camera’s in their home. So, even when you don’t think they are listening, they are listening to the GOOD, the BAD, and maybe even you offer & purchase price strategy 🤔.
Here is a good example. I was the listing agent for my clients home. It was a great home for first time buyers, so we had a ton of action on it. In the first week we had about 6 offers ranging from asking price to a decent amount over asking price. One couple that came to see the home showed up 45 minutes late for the showing, didn’t even acknowledge it, then talked about how they would have decorated the home differently for the next 30 minutes…. With the seller standing right there! And guess what? They ended up being the highest offer by a considerable amount. The sellers could only imagine what these buyers were going to be like in escrow, and if there was anyway not to work with them, they wouldn’t. The sellers asked me to talk with the other buyers agents to see if they could come up in price to match our highest offer. Unfortunately, they could not. The sellers needed every dollar they could get to put down on their next so they ended up accepting the highest offer. And guess what? The escrow went just as we thought it would as the buyer and seller were constantly at each others throats.
Getting into escrow with somebody is kind of like dating. If you are not on your best behavior on the first date, it’s probably not going to get much better.
Is Price Everything?
Price isn’t everything….. Wait, thats not fully correct. Price IS everything, but it’s NOT the only thing. I’m not sure that makes full sense either, but you get what I’m saying. Obviously price is going to be a big deal on getting your offer accepted, but it’s not the only thing.
For example, I was working with a young couple who were looking to purchase their first home together. We looked at a home that was owned by an older couple who lived there for 45 years. They raised their three children there and had a ton of memories. I’m sure it was a tough decision for them the sell, but it was time and they wanted to move closer to their grandchildren. We received all of this information from the sellers when we arrived to see the home. The home was well taken care of, but definitely needed some remodeling and upgrading. The first time I showed the home, it was just me and the husband (Bill). The husband really liked it and saw the potential, so he wanted to show his wife (Heather, the real decision maker, ha!). Heather wanted to see it asap, but wanted to drop off their 2 year old (Jonny) with the grandparents first. I told them to bring Jonny along to the showing, and I’m glad they did! Jonny was running all over the back yard having the time of his life! It got the sellers reminiscing about how their children loved the yard when they were younger.
Anyway, we wrote the offer and it was a multiple offer situation. We ended up having to raise our purchase price twice, but at the end of the day, we got the house! AND, while we were in escrow, the sellers agent shared with me that we were NOT even the highest bidder! There was another offer that was about $5,000 higher than us, but the sellers really wanted to see their home go to a young family and enjoy it as they did.
As you see there are many moving parts when it comes to buying and selling a home. Nothing really ever goes as planned, but it’s usually always manageable, and when buyers, sellers, and agents work together, things usually get done and everybody is happy.
I hope this has helped and if you have any questions, or in need of representation, I would love to speak with you and help get you into the home of your dreams.