Putting in an offer on a house is one of the most important steps in the home buying process. At this stage, you should have been pre-approved for a loan, researched neighborhoods, created your wishlist, chosen your Realtor, and compared different houses on the market. You’ve found the perfect home and are ready to purchase. In order to beat out any competition, you need to make sure you submit a winning offer. These tips will help you achieve that.
Do Research on the Local Market
While a home’s listing price will already tell you a lot about the value of the home, don’t be afraid to compare it to the neighbors. Doing research on the local market will help you to know if you are getting a good deal on the home and what to offer. You will be able to get a sense of what other homes in the area sold for, and what price trends are occurring in the area. This is especially helpful information in areas where other homes are selling for more than their listing price, so you will be able to adjust your offer accordingly.
Make It Personal
Many sellers have a deep emotional connection to the home that they are selling. By writing a letter to the sellers, you are able to add a personal touch rather than just giving numbers. People want to know that their home will be looked after and loved by the new owners, just as much as they did. Maybe they raised their family here, so you can talk about how the home would be perfect for your family as well. Talk about how honored you would be to live in their home and how excited you are to create new memories there.
Flatter the seller, but make sure it is sincere. Compliment the home and the personal touches they’ve added. If they’ve newly remodeled a room, mention it. Tell them how you love the landscaping or the choice of colors in the living room. It gives the sellers a sense of pride, and reassures them that you appreciate what they’ve done. Whatever you do, do not talk about all the changes you would make or renovations you have planned. Sellers are very protective of their homes, so this can be a big turn off to them. You may also want to be circumspect about what personal information you provide since something you think may endear you to the sellers may actually turn out to be a turn-off instead.
Paint a Picture
Offer letters that create a vision will automatically stand out from those that don’t. You want to create an image of you living in the home and enjoying life there. It shows that you have paid attention the the details of the home when you went to visit, and is another good way to connect with the emotional side of the sellers. For example, something along the lines of, “I’d be so happy to create an oasis in the backyard. We could play with the dogs every day and grill burgers for our new friends and neighbors on the weekends.” will stand out a lot more than something like, “I love this neighborhood and used to go to the school down the street.”
Show Them the Money
As mentioned in Step 1 of the home buying process, a pre-approval letter can go a long way. Buyers who have been pre-approved stand out a lot more than buyers without. It shows stability and commitment to the purchase. Another way to give the seller confidence in your offer, is to agree to a larger down payment. Large down payments generally increase purchasing power over other offers. It also helps to ease the sellers’ fears of a shaky or unstable transaction.
Make It Easy for the Seller
Sellers generally like things that will make their life more simple. If you are able, show that you are flexible with the time of closing. If they need to close quickly, let them know you can make that happen. On the other hand, if they need extra time to find a new home themselves, make it known that you can do that too. Would you be willing to rent the home back to the seller briefly? That could be a big relief for the sellers. Communicating your willingness to work with their timetable can be a huge advantage.
Also if you are able, try and avoid a lot of contingencies in your offer. Contingencies are things that need to be done before the purchase of the home. This includes things like a home inspection, an appraisal, or you selling your current home. This can add extra cost to the sellers or extra time to complete the transaction, which may not be ideal especially if they need to close quickly. Also, something you should not do is ask them to pay extra fees. If you ask sellers to pay for any fees or costs beyond what’s customary, you may just lose out on your dream home. Instead, if you offer to pay these extra costs, it will appeal greatly to the sellers.
Add an Escalation Clause
If you think the home you would like to purchase may receive multiple offers, one strategy is to include an escalation clause. An escalation clause states that you, the buyer, will pay X amount of dollars more than the highest offer the seller receives, up to a certain amount. This increases the buyer’s chances of getting the house, and eases the stress that comes with counteroffer situations. Keep in mind though, some sellers really do not like escalation clauses, so make sure you consult with your Realtor before deciding to include this in your offer.