We all know sales price is an important term, but it’s not the only term you and the seller will be negotiating. If a seller looks at two offers for exactly the same price on their home, there has to be something that can make one offer standout more than the other. If there are more than two offers, things can really get sticky for a buyer. For that reason, it is best to craft the most attractive offer possible. Even if you don’t have competition now, another offer could come in during negotiations and derail all your efforts to that point.
As an active listing agent in Fort Worth for the last 12 years, I have navigated many multiple-offer situations, both for buyer clients and as a listing agent, many of them this selling season. These are the type of strategies I would share with a buyer client entering into a competitive situation.
Negotiating Tactics to Consider When Crafting an Offer
Be Ready – If you’re watching the local market right now, you know that listings go fast and buyers don’t have time to waste.
- Make sure your financing is ready to go, not just that you are pre-approved. It will serve you well to have a relationship with a local lender – someone who frequently works with local Realtors and has built a rapport through repetitive successful transactions together.
- A local lender is attractive to listing agents and sellers. Often it translates to a smoother process with better communication, fewer appraisal issues, and generally less pitfalls delaying (or even preventing) closings as frequently happens with big bank out of state or multi state lenders.
- Consider having the inspector ready so we can write in a brief option period. Or consider a pre-inspection if the seller will allow it so we can write an offer without an option period.
Sell Your Current House – In most cases, the seller will be taking all or part of the cash they receive from the sale of their home and buying another one. Many buyers have to sell their home in order to purchase another one, so it’s best to have your home sold before making any offers. If you have to put a contingency clause in the contract based on their current home selling, it will weaken your offer. In fact, in this competitive market, it will nearly take you out of the running altogether.
Show The Seller You’re a Serious Buyer – Increase the earnest and/or option money to show the sellers you aren’t going to get cold feet after the bidding war is over. The last thing they want to do is put their home back on the market after a deal has fallen through.
Predictability is Key – Anything that can give the seller the peace of mind that one contract will close on time and as agreed will make them inclined to accepts your offer over another.
- Limit the contingencies to only the most essential items.
- The borrower who has a signed, preapproval letter will appear to have a greater certainty to closing than a buyer who only says they have talked to a loan officer.
- Some lenders’ letters are considered “gold” and others may not be worth the paper they’re written on. The seller will depend on their listing agent to advise them.
- The buyer who presents a cash offer removes nearly all uncertainty. Not everyone can do that, but if you ever wonder why a seller would choose a cash offer over another with a competitive purchase price, this is why.
Don’t Nickle and Dime – We all think in terms of this being a race to the highest purchase price. The reality is sellers are more concerned about their bottom line for net proceeds and there are many terms of a sales contract that add cost to one party or the other. One buyer may be asking the seller to pay part or all of their closing costs and the other buyer is paying their own costs.
- Don’t ask for seller contributions toward buyer closing costs.
- Consider your loan program choice. Closing costs could be more expensive to the seller based on the type of mortgage program you have chosen.
- Where avoidable, items like survey, title policy and insurance riders should not be added to the seller’s costs.
Be Flexible – Let the sellers know that you are flexible about terms, such as move-in dates and home warranty selections. Consider offering to close early and offering to lease the home back to the seller for a short time. Ask you Realtor to contact the listing agent to find out as much as possible about the seller’s needs before making an offer so you can offer exactly what they want.
Introduce the Family – This may sound silly, but in my experience it works! An emotional connection has been known to make a difference and increases the chances for one set of buyers to get the home. Homes are personal to us. Sellers are leaving a place with many memories and you are looking for a place to make new memories. Write a note introducing yourself/your family and tell the sellers a little bit about why you chose their home. You might even consider including photos of your family.
Representation is a Must – A buyer attempting to represent themselves in a multiple offer situation usually doesn’t end well. Offers submitted without a professional usually mean more work for the listing agent and more uncertainty for the seller. Secure an experienced agent who sells in the area often. We know the recent sales and off market activities that can affect your offer price. Good agents have rapport with other agents. The listing agent is providing advice to the seller during this decision. You want the listing agent pulling for your offer.