When buying a new home, you want to make sure you’re getting the best deal you possibly can. One way to do that is by submitting an offer that the seller just can’t refuse. Here are a few tips that will help you submit a winning offer.
1. You want to have all your ducks in a row before you begin your search. Have a lender on speed dial. The very first thing you’ll need to do is to get a pre-approval from your bank or chosen mortgage company. This lets the seller know you are serious and that you’re financially able to buy their home. A pre-approval will most definitely give you the edge over another buyer that may not be qualified to buy.
2. It’s extremely important that you know the market area. That’s the only way you’ll know if the property is fairly priced and what you should offer. One thing to be aware of though, is that sometimes a home may intentionally be priced lower than the current market value in order to attract multiple offers. In this case, you may want to bid over the asking price if you’re really interested in the property.
3. Putting down a large earnest money deposit with a reputable escrow company will make a huge impact on the seller’s decision and will definitely strengthen your offer and your negotiating power.A good strategy when writing a winning proposal is a willingness to put down a substantial deposit with your offer. A reasonable deposit will be about 3 percent of the value of the property. A seller usually takes such an offer seriously, and will feel confident that you are committed to stand by this offer. This could give your offer a winning edge. Submitting a pre-approval letter with the offer puts your bid ahead of the others by showing the seller that your offer is backed with serious intent.
4. Find out what’s motivating the seller to move. Does the seller need to move quickly, If so, then include in the contract an end of the month or sooner closing date. It may also help to eliminate as many contingencies as possible. The more convenient you make things for the seller, the more likely you are to have your offer accepted.
5. Write a personal letter to the seller letting them know all the things you love about their house and why you feel you’d be the best person to buy their home. Most seller’s have an emotional attachment to their home and want to sell it to someone who will love it and care for it as much as they do.
6. Put a quick response deadline on your offer. If your offer is strong, you’ll want the seller to accept it as soon as possible. This will help to eliminate another buyer submitting an offer that could potentially compete with yours. Talk to your realtor about the best timeframe for your offer deadline. The Fast Kill The Slow. A buyer will be in the best negotiating position in a competitive situation if they are be the first buyer to submit a reasonable offer the seller can work with. It should compel a response from the seller before the seller receives any other offers. Acting fast and strong in a competitive situation gives a buyer the best chance to beat out other buyers.
7. ALL Cash Offer
8. Strengthen Other Elements of The Offer. While a seller’s decision often comes down to the net sales price (what the seller will walk away with), there are other elements of an offer which buyers and agents sometimes forget – elements which can sway a seller off of accepting the offer which nets the most. These include:
- Size of the down payment: The larger the better.
- Size of the earnest money deposit: The larger the better.
- The seller subsidy: Sometimes referred to as Buyer Closing Cost Credit. Eliminate this if at all possible.
- Settlement date: Either as quickly as possible as noted above, or a date of the seller’s choosing in the event the seller needs, or wants, to stay in the property longer, or even past the settlement date. Flexibility on the part of the buyer can prove to be a real incentive for a seller to accept this offer over others. A good agent will always communicate with the seller’s agent to gather this info on seller preferences.
- A strong lender letter. This is a letter written by the buyer’s lender of choice indicating the buyer’s ability to obtain the financing indicated in the contract. The stronger this letter is written, the stronger the buyer’s offer looks to the seller.
- A CASH offer. Any offer indicating the buyer will be purchasing ALL CASH, with no financing, will require a statement proving proof of the funds necessary to close the transaction. Without this proof, the cash offer is worthless. With this proof, the offer is “golden!” CASH is king!
9. If you have the cash as a buyer, offer to pay for some, or all, of the seller’s closing costs. This is the reverse of asking the seller to pay for some of the buyer’s closing costs. This can reduce issues of increasing the price to net the seller more and possibly avoids appraisal issues by NOT raising the sale price.
If you would like more information about submitting a winning offer, contact your realtor to request a consultation. Your realtor would be happy to assist you in any way he can.