You found a house that you love – but everyone else loves it too! You know you’re not the only one putting in an offer, how can you make yours stand up and be noticed? Here are a few tips that can help your offer shine!
- Purchase price – Offering more than anyone else – if feasible – is often the best way to win the bidding war
- Amount of earnest money – Buyers often use a small amount -$1,000 is a common amount- as an initial deposit on the home. Because you stand to lose that money if you walk away from the purchase for no reason, making this a sizeable amount – $10,000 for example – shows the seller that you’re serious about the house. It also gives the impression that you are strong financially.
- Home inspection contingency and amount – In a competitive offer situation, buyers often choose to remove the home inspection contingency. If you think you’ll do this, see if you can get someone who has some home renovation experience to come along with you to an open house or private tour. They won’t be able to see everything but many large problems will be obvious to a seasoned builder. If you choose to keep the home inspection contingency, think about how large of a problem you’d have to find before you would no longer want to buy the house. Use that number as your home inspection contingency limit.
- Other types of contingencies work the same way: the less, the better. Buyers sometimes remove the financing contingency even if they’re not paying cash. If you think you want to go this route, you’d better be very confident that you’ll be able to get your mortgage. If you can’t get the loan for some reason, you could lose your entire downpayment.
- If you can’t waive the mortgage contingency, consider a high downpayment percentage. This can alleviate fears, like the home not appraising for the offer amount, and should make the seller more confident in your ability to get a loan.
- Get a high preapproval limit – If your lender says you can afford a million dollar home, put that in the preapproval letter even if the house you’re buying is half that. The seller will see that you can easily afford her home and make her more confident in your ability to close the deal.
- Closing date – when does the seller want to move out? If you can, modify the offer to reflect his ideal closing date.
- Offer an intangible – there is often something that adds value to the seller but doesn’t impact you. It can take some work to figure this out but it’s definitely worth it. Sometimes it’s allowing the sellers to stay on for a few weeks after the closing to make their move easier. Maybe there’s a lot of clutter in the basement or garage and you can tell the seller she doesn’t have to remove it. This can go a long way toward making you seem the obvious choice.
- Love Letter – It has become common practice for the buyer to write a letter to the sellers telling them all of the things you love about the home and why they should definitely choose your offer over others. I have seen this really work for buyers but it’s a two-edged sword. Many sellers have an emotional connection to the home they’re selling – they may have raised a family there or done extensive renovation – and so they naturally want to pass the home along to someone who will love it as they have. That said, there are often details in offers and certainly in love letters that could reveal information about the buyer that invokes unconscious bias or outright discrimination. If you do write a letter, be on the lookout for common interests or shared history as you tour the home. Mentioning them in a letter can help form a bond.
Buying a home is one of the top three most stressful life events. Be sure you choose an agent with a lot of experience who can gently guide you through the process and help you every step of the way.
Up next: The Home Inspection
Start this series at the beginning.
Please note: Some aspects of this step of the home selling process are specific to Massachusetts, for example the use of offers, but all buyers should find valuable information.