If you're working with buyers in today's market, you know it can be difficult to get an offer accepted. While price is an important factor, the highest offer isn't always the one that's accepted. Because we are in a heated market, agents and buyers have been coming up with some creative ways to catch the interest of sellers. Offering favorable terms is a great way to set yourself apart from the rest-- here are a few that are getting offers accepted!
But First, Let Me Call the Listing Agent
Before you discuss potential terms with your client, the first thing you should do is call the listing agent. The listing agent typically knows what the seller is looking for, which can help you to structure your terms in a way that makes your offer more appealing. By understanding the seller's needs, you will be able to customize your offer to best suit that specific seller. For example, if the seller is an investor, they are most likely looking for a quick closing, and will want to avoid any contingency hiccups that could delay the sale. On the other hand, if the seller is currently occupying the property, they may need extra time to find their next home before closing. Knowing exactly why the seller is selling will help you strategically construct your offer.
Money Talks
After talking to the listing agent about terms, you should check the MLS to see what similar homes are selling for in the subject property's market. This will give you a general idea of what your buyer's offer price should be. However there are ways to appeal to the seller's financial interests without increasing the price on the contract. One way to do this is offering to pay some or all of the seller's closing costs. Another way is to minimize or waive certain contingencies.
Minimizing Contingencies
Minimizing or waiving contingencies has been very popular since the start of the housing boom-- and that's because they work. Minimizing contingencies seems to be extremely appealing to all sellers. It gives a seller peace of mind knowing the buyer will close without any expensive delays. These are some of the most commonly used contingency-related terms.
Home Inspection Contingency: Many buyers are offering to purchase homes 'as-is', or 'as-is-- with an exception to specific defects'. These specific defects could be structural, environmental, mechanical, or safety issues.
Appraisal Contingency: Because the prices of homes are increasing so quickly, appraisers are having a hard time finding comps that are up-to-date with the current market. To prevent this from being an issue, buyers have been offering to partially or entirely cover appraisal gaps.
Expedited Contingencies: Another way to appeal to sellers is to offer shorter timeframes in completing contingencies. For example, instead of the typical 14 day inspection contingency, you can offer a 7 day contingency. You can also write it in the contract that the buyer will order the home inspection and/or home appraisal immediately after attorney review. This will help prevent any potential delays.
Partner with a Great Lender
While some buyers may want to work with their own lender, many buyers ask their agents for lender recommendations. Having a partnership with a knowledgable, communicative lender can go a long way.
If possible, find a lender who can pre-underwrite a buyer. When presenting your offer with a pre-underwritten approval, you immediately stand out. If your lender can't pre-underwrite your clients, make sure they can provide you with a loan commitment in two weeks or less. This will ensure there are no delays or unexpected issues on the financial side of the transaction.
To take this a step further, ask your mortgage lender to email or call the listing agent on your behalf when you submit your offer. This simple touch gives the seller an extra boost of confidence that you'll close without any problems.
Be Flexible on the Closing
Offering a flexible closing date could be very appealing to many sellers. As previously mentioned, sellers may need to close in a specific timeframe-- so accommodating to their needs could have huge upside!
Another option is offering the seller the ability to occupy the home for a specific period of time after the closing. (For more information read our blog post on Use and Occupancy Agreements)
Put it All Together
Always remember, the first step in submitting an offer is to call the listing agent. Once you know what the seller is looking for, do a thorough market analysis on the MLS, then customize your terms. Using any of these terms will improve your buyer's offer, and increase the likelihood in it getting accepted.
If you have any questions about submitting an offer, contact our team!
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