The day has come – you’ve found your “soulmate home.” But there’s one small problem. Your soulmate seems to have a lot of other soulmates, and you’re going to have to find a way to stand out and catch its attention. So, you decide to up the price of your offer for the chance to win. What else is there to do? Here are other things to consider so that you can put your best foot forward during a multiple-offer situation.
Understand the Value of the Price
This offer term generally beats all other terms because, of course, the seller will place most of the focus on the price of their listing. Do not look at the price and decide what you will pay based on that number. The listing price has little relevance to the value of the home. Work with your agent to analyze the data and comps. If afterward, you believe the value is truly higher than the home’s listing price, don’t be shy about offering over the asking price.
Add an Escalation Clause
This is a rider that can be added to the contract which states that the buyer is willing to raise their offer should the seller receive a higher offer from another buyer. This clause will disclose the highest a buyer is willing to go in competition with other offers. For example, you put in an offer for $300,000 but in the event a higher offer comes through, you’re willing to pay $1,000 over another higher bona fide offer, until you reach $307,000. There are some important things to consider with this: This rider can be risky for two main reasons: One, it discloses the highest you’re willing to pay so the seller will know your highest number and you might risk losing out on the chance to negotiate. Two, not all sellers like this approach as it might come off as being overly aggressive or they might just prefer to negotiate. Your realtor should ask the seller if they’re willing to accept this clause before adding it to your offer. If you have a term that is not strong, you might want to consider changing the $1,000 to an amount that would outweigh the weakest term.
If there is too much of a gap between the two numbers, it could come across as a game to the seller. To avoid this, I suggest offering no more than a 2-3% difference between your offer number and the number you’re willing to increase to. Secondly, in the event there is another offer with an escalation clause, it could default back to your original offer number and you’ll risk losing the home.
Write a Love Letter
Write a personal letter to the sellers and submit it with your offer. Remember, the seller is probably emotionally attached to their home, and receiving a letter from a buyer humanizes them and appeals to their emotions. In this letter, write a little about yourself, what you love about the home, and the future you see when you walk through it. Keep in mind, this might not be a fit for all sellers so you should discuss with your agent if this is something they feel the seller might appreciate first.
Take the Property “As-Is”
I do not suggest this for a first-time homebuyer or for a property that could have many problems (a good realtor will be able to point out the potential concerns during showings). With an “as-is” offer, you can still conduct an inspection and walk away from the deal if the results make you feel uneasy. But, you are waiving your right to request credits or ask for repairs to address the problems that may come up. Sometimes if something major does come up, the seller may repair it or offer a credit to avoid you walking away from the deal, thus having to disclose these problems to the next buyer.
Waive your Mortgage Contingency
Unless you’re 100% certain your loan will be approved or if you’re a first-time home buyer, I do not recommend this. By removing this contingency from your offer, the seller doesn’t need to wait for loan approval to know that the deal is solid. While this is risky, it’s very effective for the right buyer. When a seller and a listing agent are comparing offers that are similar in price, they majorly consider the offer with the highest chance of staying intact and making it to the closing table with the fewest number of potential roadblocks. By removing this contingency, you’re removing one of the biggest milestones involved in a transaction.
Use a Good Lender
Your lender’s name and company on the pre-approval letter are a huge consideration for the seller. Some lenders have a bad reputation for delayed closings, mortgage contingencies, and failed appraisals. Sellers typically prefer that a buyer use a local mortgage broker such as Guaranteed Rate because they have a better reputation for the process running smoothly; they understand the local market and offer a higher level of service than those from national banks who aren’t relying on your positive experience as a source for future business. If you’re head to head with another offer that has a similar price and closing date, this could be the determining factor.
Consider the Closing Date
The closing date can be crucial to a seller. Sometimes, they are even willing to accept a lower offer if it means closing at their ideal time. Sometimes the sellers are held to a contractual obligation to close at a specific date if they are under contract on a new home. Or, the property could be vacant, in which case every day it sits unoccupied, that is money out of their pocket.
Offer Peace of Mind
Whenever I present my client’s offer to a listing agent, I like to let them know that I will do everything I can to make the process run smoothly. I might mention that my buyers are extremely serious and won’t be difficult. Or, I will note that they’re using my preferred lender, inspector, or attorney. Communicating these things tells the agent and the seller that the buyer is choosing to work with people known for pushing the deal to the closing table.
Hire a Good Agent
When you need to stand out, your real estate agent needs to step in. Strong working relationships with other realtors is crucial, and sage advice is paramount. Ensure your agent is known for being organized and proactive because the listing agent will judge each offer based on your agent’s reputation. For example, if they work for a “discount brokerage” notorious for deals falling through, your offer will probably go to the bottom of the pile. The delivery of the offer is also considered: how professional was it? Were the instructions followed, such as who to submit the offer to and the type of contract to use? Was all the information provided -was the offer completed correctly, and were the disclosures signed? How tactful have they been to work with in the past? These factors are all considered by the listing agent, who pulls a lot of weight when comparing offers with the seller.
So, rest assured and know that while the price you’re willing to pay is important, it isn’t all you have to work with. There are riders, strategies and reputable professionals whose job it is to help you stand out. Understanding what a seller is looking for and leveraging yourself to meet those needs will give you a leg up in the fight to win your dream home.