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How To Make Your Offer Irresistible to Sellers!

Posted by Emma Parker on February 3, 2021
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Hi Guys!

With the real estate market being as crazy as it is right now, it may seem too intimidating to even dip your toes in!

“Why should I get pre-approved when there is such low inventory and so many buyers like me?” 

“How will my offer stand out from so many other offers?” 

“Won’t I just get beat out every time by cash buyers if I’m using an assistance program or pre-approved with a mortgage?” 

While I’m sure these, and so many other questions pop into your head when thinking about potentially buying a home, especially hearing everyone talk about how crazy competitive the market is right now, keep in mind that there are ways to adjust the terms of your offer to make it more competitive, not just the price! 

Sitting down to write this really sparked from working with several buyers right now who are coming from the same places that you are!  Some of whom have won multiple offer situations, some who have gotten their offer turned down one or more times, and none who are cash buyers!  They all are pre-approved for mortgages, and some using state-assistance programs!  So there really is no direct route to your perfect home. 

What I hope to give you through writing this is little bits of knowledge to chew on while deciding to, or getting pre-approved.  There are really so many ways, as a Realtor, to formulate an offer and having a head start as a buyer allows you to be better prepared when situations, like multiple offers, do come up in your home search!

How to Construct a Winning Offer

 Knowing what an offer entails is the first step, which can be found in one of my other blurbs here: homebuyers-timeline-the-good-stuff-you-need-to-know, and understanding what can be done to that offer in order to strengthen it is, in my opinion, the most fun, yet stressful, step – so read on! 

Know Your Limits

  1. Determine What You’re Comfortable With

The very first thing that you need to do is to understand and set limits as to how far you’re willing to go to negotiate for a potential home.  Sometimes buyers can get so emotionally invested in “winning” a multiple offer situation, that they throw all the boundaries they set for themselves right out the damn door.  Know what you’re pre-approved for, how much of that you’re willing to offer, and understand that every home (even new construction) needs work and maintenance and can have unforeseen issues. 

Contingent Upon Inspections

  1. Playing with Inspections:

There are 3 ways that you can approach inspections: 

~ Typical Inspection Period: 10-day inspection period to do any and all inspections, as well as negotiate for repairs and are able to walk-away with all your deposits if you so choose.

~ Informational Purposes Only Inspection – where you still have your 10-day window to do any and all inspections, as well as keep your deposits if you choose to walk-away, but any findings from your inspections are for your knowledge only and you are not supposed to ask for any repairs/repair credits.

~ Waive Inspections – if you are desperate for this particular home, have a cushion of money tucked away, and want your offer to be attractive to a seller that needs to move ASAP or doesn’t want any hassle, this can be a very valuable asset to your offer.  This choice carries the most risk for the buyer, as there are no inspections done and if you choose to walk-away, you lose any deposit that you have put down. 

Depending on your situation, financing, and comfortability, these can be used to make your offer more enticing to a seller.  Understanding the implications of each is important to know, so discuss with me before we get into offering what you’re comfortable with, if we should have to think about using these in an offer.

Moving Money Around

  1. Earnest Money and Down Payments: 

Plain and simple: earnest money is the initial check you submit with your offer to just allow the seller to read your offer and put a dollar amount on your interest of their home.

A down payment is the additional deposit you submit that is subtracted from the purchase price of the home so that the amount that you’re borrowing becomes less. 

I suggest earnest money be anywhere from $100 to $5,000, depending on what you can afford. There is no right number, just the dollar amount that expresses your interest in their home (that you can afford of course).  This amount will be added to your down payment once paid, and taken off of the total purchase price of the home. 

Down payments can range anywhere from $0 and up.  Some assistance programs through the state and for first time home buyers allow 0% down, while other more conventional mortgages require 3% – 5% down, and other times buyers choose to put more down off the bat.  Getting familiar with what you can afford to put down and talking with your lender about the programs available to you can help you navigate this. 

Knowing your limits and comfort levels with both of these numbers is important, so that when you find a home that you love, you have already familiarized yourself with your max deposit amounts. 

Know Your Audience

  1. Motivations of the Seller 

One of the most important aspects of an offer, in my opinion, is understanding who the seller is and why they’re selling.  If a seller has lived in this home for 50 years, raised her kids in this house, and now watches her grandkids play here, the chances that she wants to sell quickly and have a lightning-speed closing date, unless for medical reasons, is HIGHLY unlikely.  

Understanding if a seller is leaving due to financial hardship, moving for a job/ life reasons and wants to be out quick, divorce situation, downsizing, upsizing due to a rapidly expanding family, or the countless other reasons that people move, helps determine how to formulate and present your offer. 

If Grandma is leaving to be closer to her kids who can care for her, or wants to be closer to her grandkids, she might really appreciate a hand-written letter conveyed with your offer explaining why you love her home and how you’re going to maintain it.  

If a family needs to move lickety split or has another home that they are waiting to move to, working with your lender to determine the earliest closing date, waiving inspections, or allowing them to rent-back from you if their next home isn’t ready are all great ways to strengthen that offer. 

If sons/daughters are selling their parents home for them and all they want is the most money they can get, then maybe having inspections for informational purposes or offering at a purchase price significantly higher than their asking price is the route to go down.  

Knowing why a seller is selling gives us a leg up when it comes to going about offering on their home.  A lot of people just assume the highest offer price or cash offer wins hands down everytime, and especially in this market, that’s just not the case and it’s not what we’re seeing! 

 I just recently had a situation where my buyer wanted to put an offer in, and we knew that the seller was selling the home for his parents, whom he no longer had a relationship with.  It was understood that the seller wanted the quickest, easiest transaction possible.  After speaking with my buyer, they were uncomfortable waiving inspections or having them for informational purposes, which is fine, so we decided to put in a very much over-asking price offer and a quick closing date.  Unfortunately, the seller ended up taking a lower-priced offer, but one that waived their inspections altogether.  So this is a perfect example of sellers not always wanting the highest offer possible, and buyers sticking to their guns and knowing what they are comfortable with offering! 

So…Are You Ready to Make a Winning Offer?

So don’t hesitate to get pre-approved just because of the nerves associated with your potential buyer competition!  Knowing the amount you’re working with and the terms of an offer that you’re comfortable with will make you that much more prepared in a pool of unprepared buyers!

-Emma

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