In a normal market, buyers have their pick of the litter. Less than a decade ago, buyers could get in their car, go to three open houses in one neighborhood, and write an offer on one of these homes on their terms. However, shrinking inventory and continued low rates have caused both prices and competition to drastically inflate. Multiple offer situations for desirable properties are now an expectation for desirable properties. A buyer must be savvy and nearly ruthless in their approach to get the house they want.
Other than a higher price, here are a few methods that buyers can use to strengthen their offer and stand out amongst the competition:
Work with a reputable local lender. Working with the right lender can mean the difference in getting the house into contract and being stuck in the middle of the pile. Strong lenders will begin to underwrite the buyers’ file at the preapproval stage. If the buyers are underwritten before the offer is submitted, the offer can be written with “No Loan Contingency.” From a seller’s perspective, this means that the buyers’ financial reliability is not an issue and the deal will not fall apart due to a hiccup in qualification.
Removing the Inspection Contingency. AKA The “Buyer’s Investigation of Property” contingency. After the home goes into contract, this contingency represents the buyers’ #1 “out”. Under the rules of this contingency, buyers can back out of the deal for any reason relating to the physical condition of the property, usually something previously undisclosed. By removing this contingency, the buyer displays commitment to the property and the seller is more likely to accept the offer because of this. However, removing this from the contract makes some buyers uneasy and it is not advisable in some cases. Ideally, the property disclosure packet has a comprehensive inspection package to make the buyer feel comfortable enough.
Removing the Appraisal Contingency. In a competitive offer situation, the price of the home usually gets driven up with every offer added to the pool. If you have a big enough down payment, it could be appropriate to remove your appraisal contingency. However, the situation must warrant itself and the buyer must feel comfortable with doing so. Normally it’s the amount of down payment that is the most important factor here.
Personal Letter. For some sellers, it’s all about the price. However, for more emotional owners, they care about passing the home to someone who fits a nice cute profile of someone that will appreciate the property. A cover letter describing a brief background of the buyers and why they chose the property will go a long way.
Signed Disclosure Package. Sellers want to know that the buyers have read everything. Have the agent send a cover sheet or disclosure package to include in the offer presentation.
There are plenty of small suggestions similar to the above to position the buyer correctly amongst the competition. It’s essential you work with a good agent who knows all the little tricks.
Real Estate Agent
Golden Gate Sotheby’s International Realty