The summer months are widely considered to be an active time in the real estate industry. However, restricted inventory and high demand can make it increasingly difficult to acquire a property. Every viable house on the market will usually receive multiple offers – that’s just the way it is. Fortunately, there are steps you can take to make your offer stand out from the competition.
9 Ways To Strengthen Your Offer:
9.) Present it In Person
Not surprisingly, the real estate industry is one in which personal interaction reigns supreme. In fact, many prominent investors have made a profitable living cultivating working relationships with like-minded individuals. It is, for all intents and purposes, a people business. However, with advancements in technology, people that were once close are now discovering that the Internet serves as a barrier- albeit a convenient one. Online access is simultaneously making life easier and relationships obsolete.
That is not to undermine the importance of a working rapport. There is still a large population that considers relationships to the foundation of the investing industry. Subsequently, personal interaction still has a prominent place. In particular, personally presenting an offer will go farther than you think. There is something to be said about those who make an effort to connect with the buyer. It may be the one factor that helps your offer stand out from the rest. Take the time and meet the seller, shake their hand and even tell them a little about yourself.
8.) Adhere to Addendum & Documentation Requirements
It may go without saying, but it is incredibly important to meet any requirements the seller sets forth. More often than not, they will require you to submit an offer with supplemental documentation, or even ask you to adhere to a specific addendum. While an inconvenience, such an inquiry is in place for a reason. The seller is looking to accomplish something in particular with their request. Fortunately, you don’t need to know why they are asking – just as long as you comply.
Failing to adhere to the sellers’ requests will immediately place you at a disadvantage. In a side-by-side, hair splitting comparison, offers that do not meet every requirement will come up short almost every time. Therefore, be sure to provide everything the seller asks for. It is a simple step to follow, but it will automatically give you an advantage over anyone who fails to do so.
7.) Include Proof of Funds and/or Lender’s Preapproval Letter
Similar to that of the previous tip; including proof of funds or a lender’s preapproval letter could give you a slight advantage over the competition. While it is by no means a requirement to seal the deal, it will provide the seller with peace of mind. In providing a seller with these documents, they will be more inclined to trust that you are a serious buyer and move forward with a deal. Conversely, neglecting to include these papers will only place you at a disadvantage. Why not take the extra time to let the seller know you are serious and capable of following through?
Inclusions are rather controversial. While buyers would love additional amenities, sellers are by no means required to include them. Having said that, there is absolutely no reason to pressure the seller into adding them. You are already trying to position yourself in their good graces – why jeopardize that? If you are competing with other offers, this is not a good time to ask the seller to include personal property in the sale. Especially if the refrigerator, washer and dryer are specifically excluded in the MLS information. Why risk losing your dream house over an appliance or some kitchen curtains?
5.) Requests For Seller Concessions
As a potential buyer, it is not out of the realm of possibility to have some requests of your own – some of which can be easily justifiable. However, if you are asking the seller to accept any type of shortcoming, be prepared to compensate them accordingly. The least you can do is make the process go as smooth as possible. If you are going to request that the seller pays for some of the closing costs, vacate the home prior to closing, allow you to take possession prior to closing, take a big hit in the purchase price or otherwise concede something, make sure to compensate them by strengthening up everything else that you possibly can!
4.) Earnest Money
Do not be confused. Earnest money, for everything that it is worth, is a critical aspect of any transaction. While not required, it is a highly influential tool associated with the buying process. It simultaneously informs the buyer of your commitment to a respective deal, and helps fund the down payment – should your offer get accepted.
Again, an earnest money deposit is not necessary, but sellers rarely accept offers without a deposit of this nature. Buyers are advised to include an earnest money deposit in their offer if they are truly intent on taking the deal to the closing table. Assuming that all goes well and the seller accepts your offer, the earnest money will go toward the down payment and any closing costs. In many circumstances, you can get most of your deposit back if you discover something that you don’t like about the home. So if you are really serious about acquiring a property, including earnest money isn’t much of a risk at all.
The amount you will pay for the earnest money deposit will depend on a few factors, such as policies and limitations in your state, the current real estate market, and what the seller requires. On average, you can expect to hand over 1-2% of the total purchase price as earnest money.
Of course, the more skin you put into the game, the more confidence a seller will have in choosing your offer. In particular, an offer accompanied by an earnest money deposit on a short sale will always beat out others that don’t.
3.) Closing & Date of Possession
Generally speaking, the earlier you are willing to bring a deal to the closing table, the better. Conforming to the seller’s schedule and exercising flexibility will place your offer at a significant advantage. Ignore conflicts all together, and free up your schedule for a seller. More than likely, your determination will not go unnoticed, and the seller will be more inclined to accept your offer.
Find out what the seller prefers. A quick closing? An extended closing? Accommodate the seller’s needs if at all possible. Or, if you are asking for a closing time frame that isn’t ideal for the seller, be sure to offset it by strengthening the offer in all other areas that you can.
2.) Costs Paid
Real estate transactions that make it to the closing table will be accompanied by a variety of additional costs – many of which may surprise relatively new buyers. However, make no mistake, costs will come up, and somebody has to pay them. Said costs may include: appraisal, loan origination fee, lender’s title policy, septic inspection, escrow fee, survey, and so on. Although always negotiable, typically the person who benefits from a particular action is the one who pays for it. An appraisal required by a buyer’s lender should be paid for by the buyer, for example. To strengthen your offer, be sure that you are not asking the seller to pay costs that are not obvious seller costs.
1.) Cash Offers
As an investor, you are probably already aware of the power a cash offer has. However, the secret is out. Cash offers traditionally make up approximately 25% of home sales, but they have since jumped to about 40% on a national level. That is because of the significant advantage they provide. Cash is literally king in the real estate investing industry. Not only is it more attractive to a seller, but it also makes the process much easier. With a cash offer, there is no need to involve a middleman. There is a significantly higher chance that the deal will close without the threat of a borrower not being qualified. Essentially, the process is much less complicated and quicker. Moreover, when comparing a cash offer to that of a financed one, buyers will lean towards the cash, as it is more of a sure thing.