FAQs - How do you write a smart Offer in a Competitive Market?
by Rick Cox
on Saturday, September 14th, 2019 at 1:04pm.
In many parts of Richmond, there are multiple buyers interested in certain properties. These are likely updated properties in the hot parts of downtown, and they don’t stay on the market long! Many times, listing agents will call for all offers by a certain date and time…which means you only get one shot to make an offer that will allow you to be the “winner”. So, how do you accomplish this? Your buyers’ agent will be your best resource, as they know the market best and have experience in writing contracts. Listen to them and their experience, first and foremost. But, here are a few ideas you may want to run by your buyers’ agent when working on an offer together:
1. Include an Escalation Clause: this is similar to making a bid on E-Bay. For Example, you would include in the offer $500 over the highest bonafide offer received, with a purchase price no higher than X, where X value would be the highest you feel comfortable and are qualified to offer.
2. Absorb the Difference between the Appraised Value and Purchase Price (up to a certain amount of money): This can be done if you have additional funds available beyond your down payment and closing costs, and can absorb the difference between what you have offered to pay for the home and what the bank has agreed to loan (i.e. the appraised value less your down payment)
3. Be Prepared to Absorb Repair Costs: Watch out for those first repair requests! Not to be confused with buying a home “as is”. I never advise my clients to buy anything “as is”, unless they feel comfortable and have cash on hand to do possible expensive repairs, or are using a 203(k) loan to rehabilitate a home.
4. Use a Local Lender: Not an unknown internet lender…sellers are often suspicious of many of the fly-by-night companies on the internet that never meet with their clients and may not have properly vetted the buyers they have pre-approved. Local lenders are preferred because it is more likely that they loan with close without unnecessary hiccups.
5. Limit your Requested Seller Concessions: If you are in a competitive bidding situation, sellers will prefer an offer with no request for closing assistance, and a buyer who is putting down as much as possible as a down payment…it shows the buyer has more skin in the game.
6. Write a personal letter: When all else fails, this can’t hurt! Tell the seller about yourself, why you love their home, the neighborhood, etc.
GOOD LUCK! Even if you miss out on a few homes, it’s a great learning experience, and you will eventually end up in the home that was meant for you!