10 Creative Ways to Get Your Offer Accepted
Over the past year, the real estate market has been so hot that it’s not unusual for homes to go off-market in days. (The lack of inventory is to blame.) When even homes that need serious work are breaking price records, it is easy to feel discouraged if you’re trying to buy right now.
Don’t give up, though. Getting your offer accepted isn’t necessarily about coming in with the biggest bag of money. It’s really being able to anticipate what, exactly, the seller’s goals are and creating the offer that solves all of their problems. While your agent will weigh in with a strategy based on your market, there are a few common ways you can make your offer stand out. Whether you’re dealing with competition from investors or want to be sure you are making the best impression as a potential buyer, here are a few things that’ll increase your chances of a successful offer.
Hire an agent with connections
A large part of getting an offer accepted is the communication between your real estate agent and the seller's real estate agent. If your agent has connections or can communicate effectively, the deal is more likely to move forward. Your agent should be asking the seller's real estate agent what their client needs to get out of this deal. Is it the most money possible? Is it a specific timeframe, or do they need to rent the property back while searching for a new home? Knowing those needs and submitting an offer that meets them is vital.
2. Get in early
Staying in touch with your real estate agent pays off big. They’ll let you know as soon as homes enter the market, especially if they have many connections to other agents. Sometimes, agents will hear directly from other agents about a home that’s about to get listed — or that won’t enter the MLS at all (this is typically called a “pocket listing”). Regardless of how your real estate agent finds the home that fits your needs, be the first to book a showing and get ready to make an offer on the spot.
3. Be prepared to go over asking
In a seller’s market, it’s rare to find a bargain. While there are scenarios where you may end up successfully offering under-asking price (local market trends will inform our strategy), expect to offer a little more for the home you really love.
4. Offer strong deposits
This one is simple yet super important. Making your offer with strong deposits is one surefire way to show a seller how confident and serious you are about closing the deal and will often be the difference between the seller accepting your offer over another with otherwise similar terms. An offer that has low deposits will not be considered as seriously by the sellers when compared to one with really strong deposits. There are two deposits to consider and each is outlined below...
The Due Diligence fee (DDF) is a non-refundable deposit that the buyer and seller negotiate to 'buy' the house off the market and give the buyer their due diligence period for inspections and appraisal. The DDF is paid directly to the sellers when they accept the buyer's contract and will be applied towards the amount you'll owe at closing. The DDF you offer should be enough to show the sellers that you are seriously invested in making it to closing, so make sure yours puts forth confidence.
DDF's typically start around $500 on the low end and can be as high as $10,000 in some rare instances. Each scenario is different, so your DDF should reflect the amount of time you're asking the seller to take the house off the market and any other contingencies you may have to work through. For example, an offer with a $500 DDF may not appear nearly as compelling to a seller as one with a $2,000 DDF -- unless the $2,000 DDF offer needs a 6 month due diligence period in order to sell their house. In this case, the $500 DDF offer that is all-cash and can close in 28 days may be more appealing to the seller. This is a prime example of giving serious thought and consideration to your DDF in your offer to purchase.
The other deposit commonly used in the purchase contract is referred to as the Earnest Money Deposit (EMD). The EMD is a refundable deposit that will be held in escrow by the listing firm or the closing attorney until closing. It’s made after the seller accepts your offer and also shows the seller you’re serious about buying. It’s not “extra” money because it’ll eventually be applied towards your money needed to close if you follow through and close the transaction.
A typical earnest money deposit will range from 1-3% of the purchase price (but is completely negotiable) and due within a few days of the seller accepting your offer. And remember, the EMD is refundable during the due diligence period and only becomes non-refundable when the due diligence period ends and you agree to move forward to closing. Should you as the buyer decide to terminate the transaction after due diligence has ended you will also forfeit this deposit to the seller. This is the reason the EMD is typically larger than the DDF because all the risk is transferred to the seller after due diligence ends and they have actually begin moving out of the house in order to turn over possession to you at closing.
5. Write a letter to the sellers
When you make your offer, enclose a handwritten letter to the owners thanking them for their time in considering your bid. But don’t stop at a simple thank-you. This letter is about building a personal connection that normally isn’t made when sellers just look at a bunch of numbers. Expand on why you love the home and what caught your eye. If there’s a feature that sparked your interest, it’s an opportunity to build a personal connection. For example, a lovingly-tended garden or a kitchen with all the bells and whistles that a home cook would love. Above all, be honest and genuine.
6. Be flexible
If you’re open to the seller choosing the closing date, you may just get an edge over other offers, especially if the home just went on the market. Think of it this way: Sellers are also usually trying to find another home while selling theirs and may need more time. If the seller is in this boat, the idea of having extra time may be worth more than the extra money another buyer is offering.
You may also consider offering "seller possession" to the seller after closing. Giving the seller a week -- or maybe even a month -- to move out of the home after you've officially closed may relieve the stress of having to move out in a very short time period prior to closing. This could be an effective strategy to get them to accept your offer over another.
7. Nix the contingencies — when it makes sense to do so
A contingency is something that makes your offer conditional based on something happening. The three most common contingencies in a buyer’s offer are loan, inspection, and appraisal. Making an offer contingent on getting a loan, an inspection with minimal issues, or appraising for the amount you’re offering, presents multiple opportunities for the transaction to fall through. If you’ve been preapproved for a loan, the seller has had the property inspected by a reputable company, and you’re confident that the property wouldn’t appraise at a lower value, discuss with your agent whether or not you need these contingencies.
8. Beat out investor interest with a strategic offer
If you’re in an area that’s caught the attention of investors and flippers, don’t lose hope. Winning out over these types of offers is a matter of thinking of the downsides of accepting investor offers. For one, investors tend to offer all-cash but make lower offers because they’re offering cash. Second, they often want the property ASAP, forcing the seller to consider a quicker timeframe than they’d like. You can potentially beat investor offers by making an offer at the asking price (or slightly higher) and emphasizing flexibility on time frame.
9. Consider an escalation clause
An escalation clause in your offer means you’ll increase your offer to a certain price if another offer comes in. (It’s kind of similar to how, in an online auction, you can set a price limit, and bids will be entered automatically until that point.) This can be a risky thing — the seller may just counteroffer your price maximum or raise the asking price entirely. For properties that have multiple offers on the table, this may be something to consider.
10. Make sure you have your ducks in a row
Ensuring that you have your paperwork sorted, earnest money put away, your downpayment funds ready to go, and your real estate agent ready to write an offer as soon as you find "the one" will make the entire process go as smoothly as possible.
The first types of offers that sellers will likely reject are ones from only pre-qualified buyers for a mortgage. Pre-qualification means that a mortgage company has really just taken a glance at your financials to give you a rough estimate on what the amount and interest rate would be. (Often, pre-qualification doesn’t even involve a credit check.) In a seller’s eyes, this means that a lot of things could sink the transaction.
Instead, get a pre-approval. This is a more rigorous process that will look at your credit report, verify pay stubs, bank statements, and other financial documents. If you pass their underwriting requirements, the lender will give you the actual numbers for the loan you’ll be able to get once you find a home (and then provide you with a letter to provide as proof).
If you’re very serious about getting your dream home, you may be able to get a pre-underwriting letter. This is a more thorough process that includes a thorough examination of financials and other documentation needed for a mortgage.
BONUS
Don’t ask for anything
Even if there’s a gorgeous chandelier you’ve spent years searching for, keep it out of your offer. The key to getting your offer accepted in a heated market is to present the easiest, stress-free scenario for a seller. While they may be open to including particular items in the sale, making requests may give the impression that there will be a lot of back-and-forth with the transaction.