With inventory hovering around historic lows in our market, buyers are still finding themselves in bidding wars for properties. However, simply being the highest bidder is NOT the only factor that makes one offer better than another. In fact, offers that are too high can lead to appraisal issues leaving both the buyers and sellers frustrated and potentially even become a deal killer.
In order to avoid potential pitfalls and ensure that my buyers’ offers are accepted, I recommend implementing the following 5 strategies when in competing situations. These are designed to increase both the seller’s net, as well as the chances the offer is accepted.
Strategy 1: Insurance contingency
Every contract has a property insurance deadline. The recommendation is to contact an insurance agent before the offer is submitted to get approval for the coverage desired. Once obtained this contingency date can be eliminated as a concern for both buyers and the sellers.
Strategy 2: Loan Pre-Approval
A simple pre-qualified letter is the norm in a balanced market. However in today’s ultra-competitive, low inventory market being pre-approved is not only wise but imperative. Find a lender who is able and ready to provide pre-approval quickly. Most pre-approvals can be completed within 24 hours and I have several great partners who I can recommend.
Strategy 3: Title insurance
It’s customary in our market for the sellers to pay both the main title fee as well as the OEC coverage. Offering to pay these fees is the perfect example of a technique that will add to the seller’s bottom line without increasing the offer price.
Strategy 4: Buyer and Seller homeowners warranty
Purchase a home warranty for you AND the seller and reference it in the offer. Not only does this provide future protection for the buyer, but the extra few hundred dollars provides a level of security to the seller knowing that many issues discovered through an inspection may now be covered. Money well spent!
Strategy 5: Sales Commission
Another fee that is customarily paid by the seller is the broker commission. By paying some or all of the commission the buyer is again increasing the seller’s bottom line without creating the potential for an appraisal issue by pushing the offer price too high.
There are certainly no guarantees that an offer will be accepted, but strategies like the ones above create a much stronger offer. To ensure the sellers and their agents understand why the offer is stronger and should be accepted over the competing bids, I present it with explanation letters to both the broker and the seller explaining the additional benefits of the strategies implemented.