With the winter Olympics upon us, we are reminded of one of our favorite analogies that we use to help to communicate to our buyers. It is vitally important to prepare to compete in a multiple bid situation in this current hot market. Much like Olympic athletes, you will get one shot at the home of your dreams, and we need to help you prepare in advance for victory in a competitive multiple bid situation.
Crafting a winning offer is a lot like an Olympic competition. You may be up against 3, 5, 15, or even 30 different offers for a property that’s really hot. To a seller, each one of these offers is excellent in its own right, much like Olympic athletes – every one of them is extraordinary. It’s the milliseconds in the performance, or in the case of real estate, the very small details that distinguish the winning offer.
Here’s an example: suppose that you found the home of your dreams this weekend, as the Olympics are in full swing in Korea. It’s quite likely that there are also several other highly qualified buyers out there who also love the same home. Chances are high that there will be multiple bids, meaning we need to put our very best foot forward the first time.
The seller is going to be looking at an array of offers. Typically, an agent will lay out all of the offer details in a spreadsheet and then identify to the homesellers which ones really stand out compared to the rest. We need to be in that final heat in order to be able to be considered as the winning offer. Sellers are going to be looking at things that may not be immediately intuitive: price, down payment amount, inspection, earnest money deposit amount, agent reputation, lender reputation, guarantees on appraisal shortfall, free occupancy after closing for the seller, and sometimes a personal letter will help sway the decision of the seller. Here are six items to be mindful of, when writing up your offer:
1. UNNECESSARY CAVEATS
It is common that a buyer might ask the seller to pay for some of the closing costs. An offer with a caveat such as this could be the difference between you winning your real estate Olympics, or being left on the hunt for the home of your dreams. If you don’t absolutely need something, don’t include it.
2. WEAK EARNEST MONEY DEPOSIT
Sometimes buyers are reluctant to include a substantial earnest money deposit, but a small earnest money deposit telegraphs a message to the prospective sellers that you may not be financially committed to the transaction. We don’t want to introduce that sense of doubt if we don’t have to.
3. LONG INSPECTION PERIOD
Keep your inspection period as short as possible. Sellers of homes don’t want to have their properties unnecessarily off of the market for a long time.
4. APPRAISAL SHORTFALL
If you are in a position financially to add an appraisal shortfall guarantee, that will certainly help your case. This serves as a safety net for both you and the seller, in case the appraisal of the home isn’t equal to or greater than your offer.
5. AGENT REPUTATION
Much like any other profession, there is a wide range of skill level among real estate agents. Choose one with a good reputation in the local community, who takes the time to listen to your needs and to counsel you on what it’s going to take to win the Olympics of home purchasing.
6. LENDER REPUTATION
Similar to choosing the correct agent – you need to choose a lender who has a good reputation in the local REALTOR community. We recommend working with direct lenders, as opposed to brokers. When you do this, you’ll be working directly with the people who will be funding the transaction, rather than a middleman. Different lenders also have different reputations for being able to get the transaction done on time, and the local REALTORS know who the good ones are. You may love your bank, but they may not be your best choice when it comes to mortgage lending.
All of these items need to be considered very carefully when crafting an offer in a situation where there are multiple bids. Your strength in preparation, much like an athlete in preparation for the Olympics, will determine whether the house of your dreams becomes yours, or if you fall short by near milliseconds, regretting that you didn’t put your very best foot forward in the final lap.
At Gilson Home Group, we are focused on getting you the home of your dreams, avoiding these roadblocks and hiccups along the way. Call us for a complimentary private consultation on how we can approach your home purchase or sale today!