3 Ways to Create a Winning Offer That Home Seller’s Love
Mortgage Banker
Richard Blair
Published on October 15, 2021

3 Ways to Create a Winning Offer That Home Seller’s Love

You started your home buying journey and just found your perfect home. Now it is time to make an offer. You are willing to offer the seller’s asking price for the home and your Realtor is preparing your offer. You have watched those reality home buyer shows, and their offer always get accepted the first time. So, your offer should be accepted by the seller, right?

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Well in this real estate market there may be several home buyers also making an offer for the same home, now what?

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Arizona, like many other cities, is in a “Seller’s Market.”  This means that there are more pre-qualified, or pre-approved, home buyers looking for homes than there are homes available to sell.

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Low home inventory and a surplus of home buyers means a possible bidding war.

If you want to better understand the best strategies for home buyers in a seller’s market read my previous blog article. https://richardblairmortgageteam.com/every-buyer-sellers-market-absolutely-amazed-know/

You will get many helpful tips and hacks on how to best navigate the current real estate housing market.

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Let’s look at 3 strategies every homebuyer should use in a seller’s market.

Make a “Clean”  Offer and Standout

What does your Realtor mean by a “clean offer”?

The term clean offer means that your offer has no, or very few, contingencies and is meant to create a more appealing offer for the seller.

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Here is a list of common contingencies may be found in the standard purchase agreement:

  • Home Inspection: typically provides the buyer 10 days to inspect the property with a professional home inspector and complete any other inspections. For example, hiring professionals to thoroughly check the roof, air conditioning and heating, or plumbing. If the seller is not willing to complete the requested repairs the purchase agreement may be cancelled.
  • Closing Costs Concessions: the seller is asked to pay a specified dollar amount as a credit towards the homebuyer’s closing costs or pre-paid expenses.
  • Appraisal: In most situations the lender requires an appraisal of the property. The appraiser is an independent professional licensed to provide a report with an opinion of value for the home. The lender will base your loan amount on the lesser of the purchase price or the appraised value. If the home does not appraise for the purchase price the contingency allows the buyer to cancel the contract. Without the contingency you will need to make up the difference between sale price and appraised value in cash. This is called the “appraisal gap.”
  • Sale or Close of Your Existing Home: This contingency allows you to cancel the purchase agreement if your existing home either does not sell or close before a specified date. Often, the homebuyer may need the money from the sale and close of his current home to buy the new home. If you waive the contingency and your home does not close before the date specified for closing on the new home- you will lose your earnest money if you are unable to close.

Remember these contingencies are in a purchase agreement to protect the buyer. If you waive a contingency, it creates additional risk for the homebuyer. You need to weigh the risk against the benefit of winning the offer.

Think very carefully before you waive any contingency and discuss the consequences with your Realtor and mortgage banker or mortgage broker.

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Effectively Using an “Escalation Clause”

The use of an escalation clause is a new strategy that became more popular in a Seller’s market.

An escalation clause means that you agree upfront to outbid other offers received by the seller up to a certain maximum price. The escalation price will be higher than the listing price for the home.

Here is an example of an escalation clause. The home is listed for $400,000 and your offer $400,000, with an escalation clause indicating you will pay up to $420,000 if the seller receives offers greater than $400,000. Remember that by offering more than the list price there is a chance the home will not appraise for the higher sale price. You will need to bring in additional cash to pay the difference between the purchase price and appraised value.

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Sellers love an escalation clause because it creates a bidding war for their home.

Be Flexible- What are the Seller’s Needs and Concerns

The main concern of the Seller is always that there is no uncertainty in the transaction and the deal will close efficiently and on-time. You can show the Seller that there is a low risk of any hiccups by making sure your loan originator has issued a Pre-Approval, not a Pre-Qualification. This will make your offer standout.

Ask your mortgage broker/banker to call the listing agent at the time of offer to discuss the strength of your pre-approval.

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You can really improve your chances by having your credit pre-approval completed by a reputable local mortgage lender with great on-line reviews. This will make the Seller feel much more at ease with accepting your offer.

Offer the Seller additional time in the home after closing if this is a great concern for the seller. For example, sometimes the seller is moving to a new home and may need a week to finish their move out. Being flexible with possession may be more important to the seller than the highest offer.

Avoid asking for personal property or items that were excluded by the seller in the listing. The idea is to make the transaction stress free for the seller. Some buyers may ask for the seller’s lawn furniture or a washer that the seller has excluded and even a higher offer could lose out.

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Because of supply chain delays it is becoming more common for a seller to exclude the washer and dryer from the sale. Keep sight of your primary goal- to win the offer- and avoid fighting with the seller over an appliance. Small things like this can be deal killers that really upset a seller.

Following the tips and strategies outlined here could be the final push needed to make your offer the most attractive to the seller. At the same time make sure to discuss with the pros and cons of waiving contingencies with both your real estate agent and your mortgage loan originator. Knowledge is the power that will lead you to making wise financial decisions. Buying a home is one of the most important financial decisions of your lifetime. Surround yourself with an experienced and knowledgeable team of professionals for advice.

Happy home hunting.

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