6 Tips on Writing a Strong Offer
Buying a home is such a big decision. Finding the right one can be a lot of work. Every buyer has a unique situation. Each seller has a certain set of requirements and needs. Market conditions vary. No two home negotiations will ever be the same BUT there are definitely things that all buyers can consider in order to strengthen their offer in any situation. Here are 6 tips on writing a strong offer to purchase any home!
1. Use a real estate agent that knows the market you are purchasing in.
I am a supporter of the DIY revolution HOWEVER not all things were meant to be a DIY project! Buying a home is one of those things! An experienced real estate agent has likely been through hundreds, perhaps thousands of transactions. They fully understand the nuances of the whole process, beginning with the offer. An assertive real estate agent is going to work to get to know the sellers' agent as well as try to find out what is important to the seller prior to advising their client on what to offer and how to structure the deal. They are also going to scrutinize value and market conditions. Broker to broker relationships are super important. A seasoned real estate agent in your corner can actually be the reason you win in a bidding war or have your offer accepted. Working with the right broker can instill confidence in the other agent and therefore the seller that the transaction will close because good agents only work with qualified buyers and know how to navigate the process in order to close a deal.
2. Get pre-approved rather than just pre-qualified.
You will be in a stronger negotiating position if you have been pre-approved for a mortgage rather than just pre-qualified. The difference here is that a pre-qualification means that you have simply spoken to a lender and given them some preliminary information. A pre-approval means that you have submitted a loan application, along with the financial documents required, and the loan officer has sent your file to the underwriting department to obtain a pre-approval. This makes you a stronger buyer. If you are purchasing in a market where competition is steep and most homes receive multiple offers, then this step is a must! You will want to submit your pre-approval from your lender with the offer.
3. If possible, sell your existing home first.
Writing an offer that is contingent upon the sale of another home is tricky. It leaves the seller in a tough position as they cannot make a move without the sale of another property that they have no control over. A seller could lose another qualified buyer while waiting for the sale of your home. When a market is competitive, this type of offer may never get accepted. In difficult times where sellers are not able to sell or for unique properties that may not appeal to the masses, this may work but you could pay a premium for the home. In general, you are in a better negotiating position if you do not have to sell something before purchasing.
4. Keep the contingencies in your offer reasonable.
Every contract will have a series of contingencies that the buyer is responsible for working through and ultimately removing throughout the sales cycle. Each contingency gives the buyer an out in the contract. These can be stress points for sellers. Limiting the number of days for contingency periods can really make a positive impact on the seller. For example, in a standard Oregon Real Estate Sales Agreement, the buyer has 10 business days to get through the inspection period and negotiate any repairs with the sellers. It can be advantageous to the seller to have this done in 7 calendar days if possible. In highly competitive markets where purchase prices escalate above the list price due to the number of competing offers, it is not uncommon to see the appraisal contingency removed altogether. Talk to your real estate agent about the contingencies that can be shortened, waived or softened. It can make a big difference.
5. Put your best foot forward with your first offer.
Make your offer strong the first time around. This does not mean overpaying for a property. Establishing value is an important part of the offer process. Your agent will review comparable sold property data, along with inventory supply and general market conditions, in order to articulate or support your offer price. In a highly competitive market, it is generally not possible to purchase most properties at a considerable discount. Each home and each market is unique. In some markets, multiple offers are common. Your offer may look different if you are in a competing offer situation. Consider how bad you want the property and go in with your best offer. A strong agent is going to give you the right tips for writing a strong offer when it comes to price and terms but you should still do your homework and be sure that you are comfortable with the data.
6. Offer to close quickly.
Not all sellers need or want to close early however most would prefer to have money in their pocket sooner rather than later. This takes me back to the first point about working with a seasoned agent that will ask questions before counseling you on writing an offer. If an advantage to the seller, set a quick closing date. We close most of our deals in 3-5 weeks. If you are pre-approved and shorten the contingency periods you should be able to close in 21-days. Also keep in mind that closing is one thing and occupancy is another. Maybe the seller would benefit from having a week or so in the house after closing. Make sure you consider this as well.
Hope these tips on writing a strong offer were helpful. Interested in learning more about the buying process, check-in here.
