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How to make a competitive offer

By: Kari McCoy
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Question:

Dear Kari,
I am an agent and my buyers are very frustrated. We have written offers on five different homes, and they have been beat out by another offer each time. Can you offer any advice on how I can trouble shoot this situation? 

Answer: 
As you know, buying a home can be a very stressful and unfamiliar situation for most buyers. The market is still experiencing low inventory and stiff competition for many homes, so you and your buyers are not alone dealing with this situation. Most buyers are very savvy and want the best property location, top home conditions along with the best asking price. It is understandable then, with the competition high on the best homes, buyers will feel defeated when they do not prevail.

I have found that when buyers fully understand the entire home buying process, they are more willing to continue the home hunt, so be sure to explain to your buyers how the process unfolds.

Here are some tips to consider when making a strong offer:

  • Sellers like information on the buyers they will choose to work with. So, along with the lender approval letter, it can be good to include bank statements, to prove the buyer's down payment and closing cost money, and perhaps share their FICO score. In addition, tell the sellers where the buyers work, how long they have been employed there.
  • A hand written letter from the buyers, along with a picture of them, telling the sellers why and how much they like the home, will add a human touch.  This can be important to some of the segmental sellers.
  • Create a current market evaluation with recently sold homes and pending homes in
  •  the same area. Pay close attention at how many days the homes were offered on the
  •  market for sale, prior to obtaining the pending offer, along with any price reductions
  •  that may have taken place. This information will help the buyers make their best offer price upfront, since most likely, there will only be one shot to seal the deal.
  • Talk with the seller's agent prior to writing the offer, find out as much information on the sellers particular situation as possible. Try to find out what is important to the
  • sellers. Whether they want a short close on their home or a long close, have the buyers be as accommodating as possible. This will give your offer an advantage over the others. 
  • Ante up a "healthy", good faith deposit, up front. This will show the sellers how serious the buyers really are. Since the good faith money is deposited into the third-party escrow account and is applied towards the buyer's total down payment monies, why not offer it up early?
  • Shorten of the contingency time frame to 10 days instead of the standard 17 days, with     regards to home inspection, roof inspection, etc. This will help make the seller feel less stressed and more at ease with the offer. 
  • Offer to have your buyers pay for some of the extras that the sellers would normally pay. Things like the home warranty or offer to pay some of the seller’s one-time escrow closing cost fees. Rest assured, the seller's agent will tally up all the costs in the contract to provide the bottom line price to the sellers and compare with all offers.
  • If you can, offer a free rent back to the sellers until they move into their new home. This makes the move much easier and has won more sellers over then you can believe. This might be the deciding factor for the sellers to choose your offer.
  • Consider your buyers purchasing the home in an as-is condition, subject to inspections. The sellers may be worried that will have to pay too many out of pocket expenses for repairs.
  • Do not ask for any personal items, unless they are already listed in the multiple listing service print-outs. Sometimes, a simple item requested by the buyers could be for an item that the sellers have an emotional attachment to, such as a yard fountain that could have been a wedding gift. This puts a negative feeling on the offer.
  • Consider adding a buffer to the interest rate in the offer, this way if the rate goes up slightly, the seller can still rely on the offer.
  • Use the Title Company of the seller's choice. The extra cost, if any, will only vary by a few dollars more or less and shows that you are willing to make the transaction as easy as possible for the sellers.
  • Keep the offer as simple and straightforward as possible. Avoid using too many contingencies or hand written changes. Keep in mind accommodating the seller could win the home.

Best of luck to you and your buyer's house hunting.

Kari McCoy owns the Kari McCoy Group, Residential Real Estate at Lyon Residential Real Estate. She can be reached at 916-933-5274 or Sold@KariMcCoyGroup.com. DRE #00841588