While price is the first thing on a purchase offer that a home seller will look at, it’s not the only thing.
There are simply more buyers than there are homes for sale, which can make the process of finding and buying a home incredibly difficult. Aggressive markets with low inventory are driving buyers to need to sweeten their offers in every way possible. I’ve helped hundreds of people get their offers accepted in the most competitive markets of California, and we haven’t always been the highest price, either. While real estate is a financial transaction, at the end of the day, it’s also a very personal one for both buyer and seller, with emotions and anxieties running high on either side of the transaction. It’s important to consider what would be most appealing to the seller and to show them how determined and sincere you are as a buyer. Here are a few tips I’ve seen successfully enhance any offer in a competitive market.
Deciding What Price To Offer
Come in strong on price from the beginning. While some negotiating may be expected, don’t start with an offer price so low that it could offend the seller or lead them to accept a higher offer that comes along without negotiating on your price. If the home is newly listed on the market, the sellers will likely be expecting an offer at or close to the listed price, but if the property listing has been active for some time, the sellers may be more flexible on the price.
The listed price of the home may, in fact, be below the market value. Researching recently closed sales, also known as “comps,” in the neighborhood will be the best way to gauge where the price will land. Comps can easily be found online and are great for giving an idea of the fair market value of the property. By looking at properties similar in terms of neighborhood, house style, number of bedrooms and bathrooms, renovations and square footage, you can get an idea of a range of acceptable sale prices that would be expected.
Strengthen The Terms
The higher the down payment, the stronger the offer is generally perceived to be since the sellers will be less worried about your ability to qualify for a mortgage loan. While an all–cash offer may have an advantage over other buyers, there are ways to compete with similar terms of the offer. I would recommend speaking with your mortgage lender to discuss the option of shortening the loan contingency time period by getting full underwriting approval upfront.
The appraisal contingency is in place to allow you to back out or renegotiate in the case that the appraised value does not cover the loan amount. You may like to waive this if the property is undervalued and in a neighborhood where you feel confident in a good appraisal based on recent sales.
Write A Letter To The Sellers With Your Offer
I recommend including a personal letter with your offer to introduce yourself to the seller and let them know what you love about the home. A letter can help the sellers form a personal connection rather than just seeing the numbers, and will help your offer stand out against any other offers.
Selling homes is an emotional and financial decision, and some sellers can be swayed by compliments. Let them know why you love the house, the neighborhood and how you plan to take care of it to make a good impression. Sometimes, flattery does get you in the door.
A well-crafted offer (in both price and terms) gives the listing agent and seller confidence in you as a buyer. The listing agent and sellers need to feel confident that everyone is on the same page to move forward with the transaction and that the buyers can close the deal. It’s not uncommon to place bids on a few properties before getting an offer acceptance, but don’t let it get you discouraged. By being educated and well prepared to submit the strongest offer you can, you will know you gave it your best shot!