Seller’s markets exist when there are a lot of buyers competing for a low inventory of active listings. It’s not unusual for a home with all the bells and whistles to draw offers from more than one buyer. When this happens, the home often sells for more than list price. But price isn’t everything to a seller. There are other factors. If you are trying to buy a home in a seller’s market, here are 10 tips to help you write that winning purchase offer and beat out the competition.
1. Submit a Pre-approval Letter with Your Offer
A lender’s letter that says your credit rating has been examined and you can afford to buy the home carries a lot of weight. It tells the seller that you are serious and qualified. It says you are ready to buy and have already committed to lender. If the seller has a higher offer from a buyer without a pre-approval letter, your offer will likely win.
2. Hire an Assertive Real Estate Agent
An agent who constantly combs the marketplace and networks with other agents is more likely to get a lead on your new home before anybody else, which is why you need to hire a good agent. When a young nurse was ready to buy a home she had just toured over lunch, her agent insisted they write the offer on the hood of her car. Then the agent called the listing agent from her cell. She persuaded that agent to drop what he was doing and join her at his seller’s home to present the offer. The nurse’s offer was accepted that afternoon.
3. Write a Friendly Offer
Don’t include demands in your offer that are likely to irritate or anger the seller. If it is customary in your area for the buyer to pay for her own title insurance policy don’t ask the seller to bear that cost. If most buyers demand possession at 5:00 PM on the day of closing, show that you are different and be generous by giving the seller two or three days to move out.
4. Put Your Best Foot Forward
Simply put, this means write your very best offer. You might get only one chance to make an impression on the seller, so don’t make a low offer hoping the seller will give you a counter offer. If the seller has received multiple offers, the low offers most often are not even considered. They are shoved into the rejected pile. Figure out the top dollar you are willing to pay for the home and offer that price.
5. Put down a Healthy Earnest Money Deposit
A larger earnest money deposit shows you are serious and are willing to put your cash on the table. Sellers will feel you are more committed with, say, a 3% deposit than 1%, meaning if a home is listed at $300,000, don’t offer a $500 deposit. The seller could feel you have nothing at risk and could walk away from the transaction at will. A deposit of $5,000, $10,000 or $15,000 says “I am committed to buying this home.”
6. Cash Talks
If you are able to pay “all cash” for a home, say so. Although it’s always “all cash” in the end to the seller, even if the buyer obtains a loan, a transaction that is not dependent on receiving loan approval is more attractive to a seller.
7. Shorten Inspection Periods
Many standard real estate purchase contracts give the buyer X number of days to perform inspections before the buyer is required to proceed with the transaction. If the default in your purchase contract is 17 days, try shortening that time period to 10. By federal law, unless you specifically waive your right under the Lead Paint disclosure, you have 10 days to inspect the property for signs of lead paint contamination.
8. Waive Some Contingencies
If you have spoken to your legal advisor and feel comfortable risking your deposit, you might want to consider waiving contingencies such as those for loans, appraisals or inspections. However, there are risks. If you waive an appraisal contingency and the home appraises below your sales price, you will need to make up that difference in cash. But without some contingencies, your offer will be more than solid than a competitor’s.
9. Write the Seller a Letter or Make a Short Video
If the seller has eight offers on the table but your offer includes a letter that is personally handwritten by you, your offer will stand out. In your letter, you will want to appeal to the seller’s emotions by explaining why you are in love with her home and list all the reasons why your offer should win. If you can evoke tears of joy or induce empathy from the seller, your offer will likely win.
10. Offer to Close Quickly
Unless there are extenuating circumstances, many sellers prefer to close within 30 days or fewer. If you can offer a 21-day closing time frame, that might be more important to the seller than an offer for more money and be just the edge you need to beat out the competition.