7 Tips to Getting Your Offer Accepted If You Are Dying To BuyDying to buy in a seller's market? We understand how exciting it can be to take the plunge and search for a perfect home for you and
7 Tips To Getting Your Offer Accepted If You Are Dying To Buy
Dated: October 27 2020
7 Tips to Getting Your Offer Accepted If You Are Dying To Buy
Dying to buy in a seller's market? We understand how exciting it can be to take the plunge and search for a perfect home for you and your family. Finding a home that's not already under contract is half the battle in today's market. We're sharing seven strategies to help buyers position their offer to stand out against the competition.
1. Work Fast & Make Your Offer As Clean As Possible
The market is very competitive, and time is of the essence. As we are amid a housing shortage, listings are going under contract within days of hitting the market. Buyers need to be searching for new listings hitting the market and request showings for prospective properties ASAP.
When submitting the offer, it should be clean and straightforward. The offer should not be contingent on the sale of another property and free of any seller concessions (such as help with closing costs). Also, buyers should avoid negotiating any personal property in the contract. If sellers list an item in the exclusions, buyers should refrain from asking for it, no matter how sparkly or epic it might be. Remember, the goal is to have the offer accepted. The offer the buyer is submitting could be very similar in price to another offer that doesn't ask for items that belong to the seller or contingencies. Asking for excluded items or closing costs could weaken the offer.
2. No Games: Offer Your Best Up Front
With current conditions, it may be necessary for buyers to take a few risks to get the house they want. This is not the market for making low offers and hoping sellers will bite. Buyers need to make offers strong enough to beat out multiple-bid situations. In most cases, buyers will have to submit an offer very close to the listed price and if they can't live without the house, go above the asking price to get under contract.
Submitting an offer above the asking price won't end up costing a buyer that much in the long run, but it could win them their dream home. The down payment and monthly mortgage payment won't change dramatically unless the offer amount is unrealistic. In most cases, the buyer will only need to offer a couple thousand more to achieve the win. Keeping the offer aligned to the home's value while still offering above the asking price will secure the house and show the seller the offer is serious.
3. Pick Up The Title Fees
Selling a home can be expensive, so opting to pay for the Owner's Title Insurance Policy & Search Fees on the contract can give a buyer a competitive edge in a multiple offer situation.
Depending on the Florida County you live in, they customarily pay specific Title Fees on the buyer or seller side. Historically, in the Tampa Bay market, sellers often designate the closing title company and pay for the Title & Municipal Lien Searches and Owner's Title Policy for the buyer. If the buyers are securing a loan, they pay for the Lender's Title Policy, required Endorsements, and any fees associated with closing the loan. They can negotiate these fees in section 9C Title Evidence and Insurance of the FAR/BAR Standard & AS-IS Contracts.
For example, in the Tampa Bay Market, if a seller listed their home at $400,000, they would approximately pay around $2400 in Title Policy & Search Fees if they designate the closing title company in section 9C of the contract.
Here is the breakdown:
Owner's Title Policy (promulgated rate in Florida) $2075
Title Search Fee approximately $75-150
Municipal Lien Search Fee, approximately $150-200
A buyer opting to cover these costs on the contract would favorably position their offer. This can be an effective strategy in a seller's market, especially if another buyer submits a similar offer without knowing the savvy advantages of ticking that box on the contract.
4. Shorten The Inspection Period
To signify more confidence to the seller, buyers can shorten the window for the inspection period. A shorter due diligence period means the seller has to wait for the buyer to commit to the purchase in less time. Plus, if something comes back on the inspection reports that unresolvable between the parties, the seller can go back to the market sooner rather than later.
Pro Tip: Hiring a reputable Home Inspector is essential. Buyers should contact the home inspector(s) they want to work with at the beginning of their home search and find out how quickly they can schedule inspections before submitting offers with shorter inspection periods. Suppose a significant defect isn't found until after the due diligence period ends. In that case, it could leave the buyer with a hefty bill, or they could lose their earnest money deposit if they cancel the contract outside of their inspection period.
5. Add An Escalation Clause To Your Offer
An escalation clause can be a powerful tool when making an offer on a property, especially in a multiple offer situation. An escalation clause means that the buyer's offer will outbid other offers to a maximum disclosed price. For example, if the buyer makes an offer stating they will pay $350,000 for a home, and a higher offer comes in, they will increase their offer by X up to a maximum of $365,000. The risk of providing an escalation clause in the offer is the seller knows the maximum amount the buyer will pay for the house. Buyers must understand that they are showing their hand and should not put more than they would want to pay for the home.
6. Offer To Cover Potential Appraisal Deficit
To get an offer accepted, buyers may have to submit offers over the list price. This might be tricky if the buyer is securing a loan, and the offer comes in above the bank's appraisal value. Sellers might be afraid of this, so they would like to guarantee that when the buyer makes an offer over the asking price with a loan, they will come up with some money to cover the difference if the appraisal were to come in short. That is what we call appraisal gap coverage. It is insurance to the seller that the buyers will pay an additional amount over the home's appraised value if the appraisal is less than the agreed-upon purchase price.
If a seller is looking at two equal offers and one offer has appraisal gap coverage, but the other offer doesn't, they are more than likely going to go with the offer with appraisal gap coverage.
7. Write A Letter To The Seller
While money seems like pretty excellent motivation, sometimes emotion can be just a motivating. A simple way a buyer can increase their odds of getting their offer accepted is to write a personal letter to the seller. Sellers are more likely to deal with someone they like or can empathize with, so including plans for the house along with a picture of themselves (or their family) will help the sellers put a face with their offer.
If you have questions on your home search, call us at 727-398-2310
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Abbie is a Licensed Realtor with 10+ years of industry experience in our local real estate market. With her background of sales, marketing and business development in the title insurance industry, she....
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