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Trulia Charl…, Other/Just Looking in Charlotte, NC

How can a homebuyer improve their offer, without raising it?

Asked by Trulia Charlotte, Charlotte, NC Tue May 14, 2013

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Good morning.

Generally, Sellers want max cash as fast as possible, with the lowest risk that the sale will fail. About the strongest offer we encounter is: cash, no seller concessions, property in "as-is" condition and closing in 10 days. The closer a Buyer's offer is to this ideal, the "stronger" their offer will be.

I custom craft the strongest offer possible based on each individual Buyers financial profile and situation - there are a lot of variables. Three other things might entice the Seller to take one offer over another:
1) a short due diligence period and large due diligence fee that becomes the property of the Seller at acceptance of the offer and which is applied to the purchase price but otherwise non-refundable to the Buyer;
2) Type of financing and down payment;
3) Some compelling personal story about the Buyer may entice the Seller to choose their offer over an faceless investor.

If you have a full time agent with a Masters degree in Planning with Finance and over two decades of experience, working for you, you will likely do better in negotiations. If you appreciate this answer, please give it a thumbs up, or if this was the most helpful answer, please say thanks with a best answer click.
0 votes Thank Flag Link Wed May 15, 2013
Find out the sellers hot buttons. Is it an earlier closing date, would a letter about your family appeal to their emotional side, your commitment to the sale by raising the earnest money, or maybe increasing the due diligence money? Good luck!
0 votes Thank Flag Link Wed May 15, 2013
By including a pre-approval letter, removing contingincies and placing a closing date 30 days or less.
0 votes Thank Flag Link Wed May 15, 2013
A buyer can improve any offer without increasing the price on the house to make the offer more attractive to the seller. Some of the things that I recommend to a buyer or to a seller to make the offer more palatable if we cannot move on price ro do not want to are:

1. larger due diligence fee. The more money you have in the game the greater the chances that you will close and the less risk there is to the seller. Since this money is non refundable the more you put up on the house the more sincere you look at wanting the house.

2. Shorten the due diligence period. most agents are taking the due diligence period out to a week to a few days before closing. By making it two weeks or less you are not keeping the seller hanging on the offer worried that you may cancel or not.

3. Increase the earnest money on the offer to show you are serious about buying the house.

4. Remove any contingencies you may have with the offer. Like having to sell your house to buy or conditional on a job transfer....

5. Change the closing date to be more accomaditing to the seller or shorten it to show the seller you have done most of the legwork in the process to get the loan approved.

6. get a pre-approval letter versus a pre-qualifcation letter. This shows the mortgage broker has actually looked over your paperwork and is confident on giving you the loan based on your paystubs and bank statements.

7. put in writing you are only going to be looking ofr the seller to do certian repairs based on the home inspection. Nothing irritates a seller more than a buyer who asks for every little thing to be fixed or repaired. Limit the scope fo repairs to needed repairs or ones that affect the structural integrety fo the house, or electrical issues or plumbing issues and not little things.

8. Change your loan type if possible form FHA to cnventional. if you have a high enough credit score you can get a conventional loan with as little as 35 down. the seller doesd not need to knwo it is 3% down but it probably carries a little more weight than a FHA loan.

9. limit the items you might be asking for in the house. A lot fo buyers will ask for the refridgerator or other items. remove them from the equation especially if they seem newer or worht a lot of money

These 9 things can help bridge a gap between the seller and the buyer without changign the price fo the house and help put a deal together.

Dave diCecco
Realtor/Broker
Coldwell Banker United
Cell:704-519-7895
ddicecco@cbunited.com
http://www.davedicecco.com
0 votes Thank Flag Link Wed May 15, 2013
All of the items mentioned by these well informed real estate professional all contribute to the sellers ASSURANCE of closing. Of even greater importance than price is the confidence that if the home is taken off the market that the sale will indeed close.
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This assurance is provided based on the sensitivities of the seller and the local market. Remove the road blocks and ostacles and the likely outcome is you will prevail over the FHA/VA offer that is 6% above list price.

Best of success,
Annette Lawrence, Broker/Associate
Remax Realtec Group
Palm Harbor, FL
727.420.4041
http://RealEstateMadeEZ.us
0 votes Thank Flag Link Wed May 15, 2013
Along with price, the terms can make or break a deal. Removing an inspection, mortgage, or home sell contingency makes the offer much more attractive. Closing time frame can make a big difference as well. Every seller is going to be different so what may work with some may not work with others.

Christopher Pagli
Licensed Associate Broker
Accredited Buyer Representative
William Raveis Legends Realty Group
914.406.9023
0 votes Thank Flag Link Wed May 15, 2013
Here in North Carolina, the "kick out" Bill is referring to is a thing of the past. With our current contract here, you are given a "due diligence" period in which to investigate the property. In this time period, you may back out of the contract with no penalty (and receive your earnest money back).

Here are a few ways you can effectively increase your chances of getting your offer accepted without going "higher" as you said...

1) Cash offer (as Bill said)
2) A shorter due diligence period (do this ONLY if you know you can get full loan approval in the time you specify, and you can get your inspections done quickly) - 2 to 3 weeks due diligence period would be very attractive to a seller
3) Increase your due diligence fee (do this only if you feel the home looks as if it may not need repairs - age of home, roof & mechanicals, etc). Remember, the due diligence fee will be a credit to you at closing.
4) Higher earnest money deposit. Remember, you can get this back if you cancel before the end of the due diligence period
5) Do not include any contingencies with your offer.

Once you have an accepted contract, you can negotiate for repairs if this comes up after your inspections. Put your best foot forward if you really want the house. Consider how much other homes have sold for in the area; while also consider what else is available. Lower inventory has brought home prices up in our area because of the law of supply & demand.

Good luck. If you need a buyer agent who can help you navigate your way through this process, I am here to help.
Jennifer Masucci
Broker/Realtor/Owner of Sun Valley Realty
704-254-6432
0 votes Thank Flag Link Wed May 15, 2013
There are several steps we use with customers to effectively improve an offer:

1. If possible make it a "cash" offer

2. Motivated sellers often want to put this experience behind them ASAP, so offer as early closing a date as possible

3. Minimize or eliminate "contingencies." They often scare sellers.

4. Consider making you offer an "AS IS" offer with the right to inspect and a "kick out" that allows you to back out of the deal without penalty if repairs exceed a specified amount

5. Offer a larger than normal deposit. Since you are going to buy it any way and your escrow deposit is protected by an inspection clause, what's the harm?

When these 5 considerations are applied, it makes any ordinary offer appear better.

Good luck,

Bill
0 votes Thank Flag Link Wed May 15, 2013
Set a closing date that works for the Seller. Offer an above average diligence fee which as long as you move forward to buy the home is credited against the purchase price. Keep your diligence period as short as realistically possible. Consider agreeing to accept the first $1500 or $2000 in any needed repairs without asking the seller for anything and have this written into your offer. Offer more earnest money showing that you have more skin in the game.
0 votes Thank Flag Link Wed May 15, 2013
Since earnest money is not "hard" until the end of due diligence, you should consider increasing your due diligence deposit. Ask your lender how long it will take to get loan commitment and then only ask for a due diligence period long enough to cover that. Close as soon as you possibly can. Make certain that you send an approval letter with your offer - pre-quals are not worth the paper they are written on. You can also remove any personal property you were going to ask for, such as the refrigerator.

We are seeing a lot of multiple offers in this hot seller's market. Your competitors are willing to offer more than asking in many cases and are doing the above suggestions to make their offer the "winner". At the end of the day, money talks . . .

Best success!
0 votes Thank Flag Link Tue May 14, 2013
I would add to all these items, increase the loan to value ratio (percentage of money you are putting down). Recently had a listing with multiple full price offers. The winner increased their Due Diligence money, the Earnest money and put over 20% down. Appraisals are a concern for every seller and a buyer that can only put 5% down may not have any wiggle room if the appraisal comes in short.
0 votes Thank Flag Link Tue May 14, 2013
Hello there!

Jen really hit the nail on the head there. If you don't want to raise your offer, give on other issues such as:

-Increase your earnest money deposit - A higher EMD means you have more stake in the game and won't back out for any old reason.
-Close quickly and with few contingencies - This is a biggie. A quick closing gives the seller the opportunity to move forward with their plans, and sell their home quicker than planned.

Those are a couple of the main issues; there are others of course.

Keep in mind though, most sellers in this market aren't all too concerned about the above, and are really more concerned with their bottom line.

I recently bid just under asking price on a small foreclosure that we knew had other offers on it. The buyer out up over $20k in earnest money, could close in 10 days, and offered to buy the home as-is, with no inspection. The seller ended up rejecting our offer and taking a slightly higher offer, simply because their bottom-line was more attractive.

Lots to think about for sure! Call or email me with questions!

Michael Bowman
Benham Real Estate Group
704-490-5644
Mbowman@benhamrealestate.com
0 votes Thank Flag Link Tue May 14, 2013
By offering more earnest money or due diligence money....making the closing date more attractive....taking the home as-is.
0 votes Thank Flag Link Tue May 14, 2013
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