Here are five ways to make your offer stand out.
If you’re a buyer and ready to start shopping for homes, you should know that it’s brutal out there. There isn’t a lot of inventory, which has made it hard for a lot of buyers to find the right home. Historically low interest rates are only adding fuel to the fire—buyers want to get their offer accepted now even though they know they’re paying a premium because they also know that these rates equate to long-term savings.
Let me tell you a quick story. Back in 1982, the Cabbage Patch Kids dolls were introduced to the world and started selling faster than stores could restock their shelves with them. The savvy buyers (i.e., those who knew when the deliveries of these dolls were being made) were able to get in line at stores and buy a doll for just $30. The unprepared buyers had to offer as much as $100 to the savvy buyers for a single doll because their kids wanted them so badly—three times as much as the retail value.
That’s what we’re seeing right now. Only the most prepared, aggressive buyers are winning. If you’re not willing to play ball, you’re going to lose. With that in mind, there are five ways you can make your offer stand out among the competition. Price is what will get sellers’ attention, but these tips will help you stand out from other buyers:
1. Remove the appraisal contingency. Right now, we’re dealing with appraisal issues. Appraisers value properties based on past sales, and homes are sold based on what a buyer feels it’s worth and its future value. We’re finding that there’s a gap between what banks think homes are worth and what buyers think they’re worth. If you have the cash reserves, consider removing the appraisal contingency from your offer and offer to pay the difference between the appraised value and the agreed-upon price (within reason). For example, you can offer to pay up to $20,000 to cover any appraisal gap. That will give the seller peace of mind.
2. Call the listing agent to ensure you understand the seller’s situation. Do they want a long or short escrow period? What else is important to them? Write your offer based on their needs, because most sellers are choosing offers based on what makes sense to them, even if those offers don’t include the highest price.
3. Tighten your inspection timelines. As a buyer, you’ll have time to do inspections, review disclosures and HOA documents, have the appraisal, etc. All of these inspections come with contingency timelines that are usually between 17 and 21 days. Consider doing your inspections in, say, 10 days, or reviewing the appraisal in 12 days. Anything you can do to add peace of mind to the seller and show them you’re motivated will make you look stronger.
4. Remove certain seller closing costs. For example, a lot of buyers ask sellers to pay for a home warranty worth $550. If you can pay that yourself, it will net the seller more money. Or instead of the seller paying for and scheduling the termite inspection, you can offer to do it. Whatever the case may be, many buyers are offering to pay the sellers’ customary closing costs to add value to their net without improving the purchase price, so you should do the same.
5. Work with a good agent. If I’m a seller and get multiple offers, I look for the best price and terms, the most motivated buyer, and one who will stay in escrow even when things get tough. Additionally, I’m looking to work with a great agent, and I know the buyer’s agent is looking for the same thing. This means you should work with an agent who knows how to make an offer that sellers will fall in love with.
If you’d like to know more about how to get your offer accepted or have any other real estate questions, don’t hesitate to reach out to me. I’d love to speak with you.