How to Make Offers That Sellers Can’t Refuse
When you’re competing with other buyers for your dream home, it’s important to craft a home offer that the seller can’t resist, or else it might be weeks or months before you find another suitable property.
How do you create an irresistable offer? Here are six things to keep in mind.
1. Think beyond the asking price
The asking price is what the seller wants to get for their property. In many cases, however, they’re willing to take less or more.
As the buyer, offering less than the asking price makes sense from a financial standpoint. However, if a property has received a ton of interest, rather than view the asking price as the maximum you can offer, view it as a starting point for negotiating.
When appropriate, submit an offer for more than the asking price to beat out other buyers. Your real estate agent can recommend a price based on the market and comparable sales for the neighborhood.
2. Keep it simple
Simplicity is another way to win over home sellers. The more complicated your offer, the more likely it will be rejected by a seller.
This doesn’t mean that you can’t include contingencies or ask for certain repairs, but be reasonable. In other words, don’t require the seller to convey all of their home appliances, and don’t nitpick over every minor repair.
Be aware that if you enter a bid that’s contingent on you finding financing, the seller may not consider your offer, but instead choose a buyer who’s been pre-approved. With that being said, get your financing in order early in the process.
Speak with one of our loan experts to learn about the pre-approval process. We’ll review your credit, income, and assets to determine what you can afford to spend on a property. Being pre-approved says that you’re a serious buyer and it can strengthen your offers. And, if you’re in a highly-competitive market, ask about our FasTrac approval process which gets your key loan file information reviewed by our underwriting team before you begin shopping for a home!
3. Include an escalation clause in your offer
Talk to your real estate agent about including an escalation clause with your offer. Basically, this clause increases your offer up to a certain amount if another buyer outbids you.
If you believe that you’ve found the perfect home for your family, including this clause is added protection and increases your chances of getting the home.
4. Pay your own closing costs
It’s not uncommon for sellers to pay all or a percentage of a buyer’s closing costs. In fact, some sellers put their homes on the market with the intentions of assisting buyers with this expense. Keep in mind, however, if you’re competing with a buyer who doesn’t need closing costs assistance, their offer will appear more attractive.
If possible, prepare to pay your own closing costs, even if you must use gift funds.
5. Increase your earnest money deposit
Earnest money is a type of security deposit for major transactions. It’s typical to give earnest money when submitting a contract to purchase a home. This money doesn’t go to the seller, but rather it is deposited into an escrow account. This is good faith money, and it shows a buyer that you’re sincere.
Earnest money deposits vary, with some buyers giving between $500 and $1,000 or more depending on the purchase price of a home. If you want to entice a seller, consider giving a larger amount, perhaps doubling what’s customary for your area. Only do so, however, if you’re serious about purchasing the home.
If the deal continues as planned, these funds are applied to your down payment and/or closing costs. On the other hand, if you get cold feet and cancel the contract for reasons not covered by your contract’s contingencies — such as “subject to a satisfactory home inspection” — the seller can keep your money for breach of contract.
6. Be flexible
Some people sell their property first and then look for another home. In such a situation, you might close on your new property before the seller is able to close on their next home. For this reason, before accepting any offers a seller may inquire as to whether buyers will permit a rent-back or leaseback option.
In this scenario, the seller remains in the home after closing and pays the buyer rent for an agreed-upon length of time. This provides the home seller with additional time, if need be, to finalize the deal on their next property.
Cherry Creek Mortgage has helped numerous families finance their homes, and we’re eager to help you, too. We offer a wide selection of home loan products and powerful mortgage tools to assist you along this journey. Call us today to discuss your options, and to learn how you can get pre-approved for financing.