Co-authored by: Shikma Rubin, Colby Raymond, Frank Malbon, and Will Beasley
In today’s low inventory market, it is common to have multiple offers on a property. How can your offer stand out and beat the competition?
We partnered with Stephanie Caskill and Linda Fox Jarvis of the Re/Max Coast and Country to learn the best strategies.
- Obtain a Pre-Approval
One aspect that can set the offer apart is a pre-approval letter. We sometimes hear the words pre-qualification and pre-approval used interchangeably, but they have different meanings.
Pre-qualification can be issued after the lender has spoken to the client to understand their financial picture and run their credit report. The credit report allows the lender to see some of the financial history. This is why a strong credit score is important.
Pre-approval is when the lender has verified several pieces of information provided by the borrower. Here is a list of documents a client needs based on loan type. Pre-approval also matters because you can catch a lot of issues if the lender receives the documents up front.
In today’s market, a pre-approval letter can win you a deal AND ensure a smooth closing because the lender has already verified much of your information.
- Have different types of financing
Homebuyers have different financing options and each one has unique aspects and requirements such as down payment, seller concessions, credit scores, etc. A seller might care if you have options because traditionally FHA and VA have stricter property requirements and appraisers sometimes call for more repairs than conventional financing. If a buyer is qualified for more than one loan type, request the lender to note that on the pre-approval letter.
- Limit your contingencies and shorten the dates
When buyers write their purchase contract it can be contingent on different items. For example, the sale and settlement of the current home, home inspection, etc. Those contingencies may be alarming to the seller because it means the buyer can walk away from the deal at different points during the transaction. In a multiple offer situation, limiting the amount and/or the type of contingencies may help you stand out from the pack.
Another option, if you have contingencies in your contract, is to add a short time frame to remove the contingencies. Then, the seller knows even sooner if there are any issues with the contract.
- Work with the seller
Understanding the needs of the seller may play in your favor. For example, if you know they may need to retain possession to move to their next residence, offer a rent back option. Working with the seller is sometimes more important than the price or terms.
- Make a larger earnest money deposit
The earnest money deposit is provided with the buyer’s purchase contract. It signals a good faith to execute the contract and that the buyer won’t default on the terms of the contract.
Sometimes a larger deposit may suggest the buyer is serious about the purchase and will work with the seller to make sure it closes on time. Please note that if the contract is executed as noted in the purchase agreement, the EMD check will be applied to buyer’s closing costs and/or down payment, or can be returned to the buyer at closing.
- Make a strong offer
If there are multiple offers on a property, the buyers may have only one chance to put an offer on the table. So as they say: put your best foot forward. As you write your offer, think about closing costs assistance, sales price and dates for closing.
- Write a letter
A letter in which you introduce yourself and describe what you love about the home can be a game changer in a multiple-offer scenario. That’s because sellers often have an attachment to their homes and want others to love it too.
Photo courtesy of Mark Moz (Flickr)