Making an appealing offer on a home is a bit of an art. There is no magic formula for crafting the perfect one, and in many instances the best offer will depend on what the seller is looking for. However, if you are certain you have found the home of your dreams, there are a few techniques you can try that may help your offer stand out above the rest.
Appealing to the seller's emotions
Writing a letter - or even making a video - that explains why you want the property has become an incredibly popular tactic. Sellers are human beings, after all, and appealing to their emotions could definitely help you win the home.
Laura Kaufman, a real estate agent with Zephyr, told the San Francisco Chronicle that she once worked with a seller who accepted an offer $40,000 below the highest offer because of a moving letter from the potential buyer about being a single father.
Many experts, including Patty Da Silva of Green Realty Properties have voiced the importance of these letters.
"I always tell my clients: Do the letter," Da Silva told Bankrate. "If the sellers live there, they love the house, and they are more inclined to give it to someone they have more in common with. It's the human factor."
Another real estate agent with Zephyr, Diane Hourany, told the Chronicle it is also important for buyers to make good impressions on the seller during an open house. Buyers should be polite, introduce themselves to the real estate agent and even come back for a second open house if they can - anything they can do to make themselves memorable in a positive way will help.
Buyers should also try to do some digging into why the seller is moving in the first place. If they can figure out the seller's motivations, they can make their offer appeal directly to what the seller wants.
Many offers include contingencies, which outline situations in which the buyer could decide to back out of the deal. For example, it is typical for an offer to be contingent upon a home inspection that does not reveal any major issues in the home. While it may be risky, eliminating certain contingencies from an offer could make a buyer very appealing to the seller.
If buyers want to waive the home inspection contingency, they could schedule a pre-offer inspection to make sure the house is in good shape. Bankrate warned this could end up being a waste of money if the offer is rejected, but it is a good way to make the offer more stand out.
Many offers often include appraisal contingencies, meaning the buyers can back out of the deal if the bank appraises the home to be valued at less than the purchase price. Waiving this contingency can be dangerous. Bankrate explained that if the appraisal does value the home for less than the buyer agreed to pay, the bank will only finance the mortgage up to the appraisal price. If the contingency has been waived, then the buyer is responsible for covering the difference. If the buyer can afford to do this and the market is competitive, it could be a great way to differentiate the offer.
Demonstrating an ability to pay
There is almost no use in submitting an offer without a mortgage preapproval letter. Sellers need to know that the buyers are actually in a position to pay what they have offered. U.S. News and World Report recommended that buyers get preapproved before they even start shopping around for new homes. That way they can shop within their price range.
Joel Schilperoort, a real estate agent with Zephyr, told the Chronicle that buyers can make their offers stronger by also including proof of funds even if a listing agent does not require it.
Pricing the offer
When determining the price to offer, a buyer should consider the state of the market. U.S. News and World Report explained that if it is a seller's market and the buyer is facing a lot of competition, offering something lower than the asking price will probably lead to rejection. The seller will probably have many offers to choose from, and in a competitive market there will probably be someone willing to pay the full asking price. If, however, the house has been having trouble selling, a lower offer may not be a bad idea, as the seller will be more desperate to find a buyer at that point.
U.S. News and World Report also recommended researching what other similar homes have sold for in the area to make sure the seller has proposed a reasonable price. Buyers can offer less than the asking price when its above market value. When negotiating, it is best to avoid arguing over little price changes, as it could cost the buyer the home if the seller becomes frustrated.
According to Trulia, there is generally no reason to wait to make an offer once a buyer is ready. While some sellers fear an offer that comes in too quick means the home is too cheap, most real estate agents actually encourage their clients to accept first offers. The only thing a buyer should think about is the fact that if he or she is early to make an offer, it will probably not be possible to get a discount. If the buyer waits, though, he or she may not get the house.