Even in a slow real estate market like we are experiencing now, there are still circumstances when buyers have to compete against another offer. Having been through quite a few of these for our sellers and buyers, I thought we could offer some perspective on how sellers typically evaluate multiple offers. You’ll find that price isn’t the only thing, so craft your offers with these different factors in mind.
- Price – I just said that price isn’t everything, but guess what, if there is a big different in price, it will win most of the time. More money can make up for many other factors.
- Closing Date – Most sellers have a need to buy after they have sold their home. Sometimes the motivation because of a job transfer or the start of a new school year can be quite strong. Make sure your offer closes within 30-45 days maximum. If you want to be more aggressive, work with a lender who can close even quicker. Sometimes this can push your offer past the others.
- Contingencies – In today’s slower market, most homes have an inspection and financing contingency, even in a competitive situation. There are times when you can waive your inspection or financing contingency to make a more compelling offer, but you need to understand the risks in doing so. The one contingency that sellers still don’t want to see is that your offer is contingent on selling another home.
- Loan Qualification – Be sure to include a loan pre-approval with your offer. In addition, you’ll want to play up the positive aspects of your employment if you can. You need to demonstrate to the seller that you are the better candidate to get a loan on the property.
- Earnest Money – Earnest money is the deposit that you include with your offer to show that your are serious about buying the home. In addition, it offers the seller some monetary protection in the event that the buyer doesn’t uphold their end of the contract. If you are competing, make sure that you have a “respectable” earnest money deposit. It needn’t be exorbitant, but it should demonstrate your willingness to purchase the home. Ask an experienced real estate agent for what is typical in your market.
- Easy to Work With – This isn’t a written part of the offer, rather it is a story that your agent will convey to the sellers. You want the seller to know that you will be a buyer who is easy to work with and only plan on negotiating on major items that come up during an inspection. Sellers are in a stressful and busy time of their life, and the offer that makes it easier for them can prevail.
- Intangibles – If all of the criteria above are the same, your offer will get evaluated in a variety of intangible ways. In fact, sometimes the intangible aspects of a buyer can outweigh other aspects of their offer. Sellers are emotionally attached to their homes, so they want to feel that their home is being passed along to another family who will care for the home in the same way that they did. If you are competing, write a letter along with your offer. Tell the seller why you love the house and how it will be great for your family. It’s cheesy, but if you are newly married or have adorable children, include a photo or two. You’d be surprised just how often this approach works.