How to come up with a convincing purchase offer
Our family is moving out of Eagle County to another more populated area. The good news is that the new city has more homes for sale. The bad news is the competition for homes seem higher also. We have found several homes that we like, and they went under contract to another buyer almost immediately. We also have found several homes that would work for us, and we have written up offers. Unfortunately, they have been rejected and before we could put in another offer, they were quickly put under contract by someone else. What do you suggest we do to increase our chances of securing a home as soon as possible?
Dear “Aspiring Homeowner,”
It sounds like you are in a seller’s market in your soon-to-be new location. Or, at least, the price range you are looking in has a lot of competition due to more buyers than sellers right now. This can be a frustrating experience, but you can certainly take steps to greatly increase your odds of getting an offer accepted on a home you would like to own. First, I would try to take the mindset of the seller, i.e. what would you be looking for if you were a seller in a relatively low inventory market and wanted to sell your home, and be sure the offer you accepted had the best chance of making it all the way to closing? Keeping that thought in mind, here are the six things I would suggest you incorporate into your offer:
1. Make your very best offer on price. Now is not the time to low ball or hope the seller will counter to your offer if you are too low. You may only have this one chance, so make your very best offer that you can and will pay for the property. Then, if someone else gets it for more money, then you can just go on to the next property, instead of wishing you had gone a little higher.
2. Make a cash offer or attach a pre-approval letter with the offer. Of course the most convincing offer is cash, but absence of being a cash buyer is best covered by a strong pre-approval letter from your lender showing that they have verified your income and credit score and have determined that you can make payments on the amount you will need to borrow.
3. Make a statement with your earnest money deposit. This is a place you can stand out and look like a strong buyer by offering at least twice what a normal earnest money deposit would be in that local area, at very little risk to you. Colorado contracts have a lot of clauses that allow the full return of your earnest money. Be sure to go over this with your Realtor, especially if you happen to be going to another state.
4. Make an offer that has minimal contingencies. There are a number of standard contingencies that sellers usually will allow. Try not to add any more, as these become red flags to the seller. Usually the standard contract covers the buyer quite well.
5. Make your offer reflect that you will pay all of the normal costs associated with the sale that go to the buyer’s side, and you might even include that you will pay some of the closing costs of the seller.
6. Make your closing and move-in date work with the seller’s needs and concerns. Here I would ask your Realtor to check with the seller’s agent to learn what the seller’s ideal timetable is for closing. Then find out if offering the seller an opportunity to lease back for a short time (usually not more than 30 days if you are getting a loan) to take pressure off their move out of the house would be a plus to them. This willingness to work with the seller’s timing is often extremely attractive to a seller and may make your offer the one they cannot refuse!
These techniques work in almost all markets, so be sure to discuss them with your Realtor, if you have not already done so. We hate to have you leave the valley, but we wish you all the best.
Joan Harned is an owner-broker for Keller Williams Mountain Properties and heads up Team Black Bear, her own real estate team of qualified experts. Harned has been selling real estate in Eagle County for 27 years, is a past chairman of the Vail Board of Realtors, past Realtor of the year, past director on the Great Outdoors Colorado Board and a member of the Luxury and Land Institutes. Contact Harned with your real estate questions at Joan@TeamBlackBear.com, 970-337-7777 or http://www.teamblackbear.com.