7 Keys to Getting Your Offer Accepted in a Seller’s Market
It is definitely a seller’s market in today’s real estate world. Just about every market across the country is dealing with some form of seller’s market with low inventory and a plethora of buyers. So what can a homebuyer do, especially first-time buyers, right out of the gate to compete with the onslaught of other competitive buyers? Do first-time buyers even stand a chance? Are there things that buyers can do to prepare themselves for a tight market? There are some things that buyers can do to prepare themselves for this type of market but it does take a little bit of research, perseverance, and knowledge not only of the market but of the type of sellers out there. If you’re looking to get your offer accepted… And what buyer isn’t? Here are seven keys to getting your offer accepted in a seller’s market.
#1. Be as prepared as possible.
And not just financially; buyers need to be as prepared as possible to make an offer, pull the trigger on inspections if necessary, avoid or waive certain contingencies, and be ready to jump when necessary. Finances is definitely the number one thing that homebuyer should be prepared for. Buyers should already have their preapproval letter in hand, ready to make a cash offer if possible, and ready to put up a larger earnest money deposit.
Now, we understand that not everyone can be as financially prepared as some investors that have half a million in cash ready to plunk down on a property. But that doesn’t mean that your offer will get overlooked. Terms make just as big of a difference to sellers as the price in some cases. If you’re unsure about how well your finances are prepared, talk to your real estate agent about the best ways to go about preparing your finances, earnest money deposit, down payment, and financing contingency in order to compete. Plus, every seller’s situation is different as well so it’s important to understand what is motivating the seller to sell and this might alter in your finance options as well.
#2. Use an experienced buyer’s agent.
We only work with buyers. We don’t work with any sellers so we understand the buyer’s side of the story better than anyone. Working with a buyer’s agent, especially in a tight market, means that your interests, your final goals, and your desires are kept at the top priority all the while negotiating on your behalf and communicating between the seller, the listing agent, and any other party involved. Using an experienced buyer’s agent that is already dealt with a seller’s market, will put you ahead of the game over agents that are new to the real estate industry.
#3. Be ready to offer above asking price.
This is really the norm in the Orlando real estate market right now. This is really not the market for submitting a low offer or even an offer and asking price. You’ll need to make your offer strong enough to beat out a multiple offer situation so you’re likely to have to go above the asking price. However, you’ll need to remember that the house may need to be appraised for the inflated amount so take that into consideration, although, as long as you have the cash funds to make up the difference, you may choose to even waive the appraisal altogether. But, this is a tricky situation so make sure you talk to your real estate agent about refusing any particular contingencies.
#4. Understand the seller.
Having a great buyer’s agent, a large down payment, and your finances in order may be great, but if you don’t understand the motivation behind the seller, your offer may get tossed aside. It’s important to have your buyer’s agent talked to the listing agent about the true motivation for selling. Price is not the only thing that sellers consider. They may need a quick closing, or they may need more time before closing, they may need help in structuring the offer or rent back in some cases. Understanding the seller’s motivation will help you devise an offer to meet the need.
#5. Make the offer as clean as possible.
Given the choice of several offers that have multiple contingencies and addenda versus one that’s clean, clear, concise and tight, which one do you think the sellers going to go with? Clean typically means a short financing contingency if one at all, appraisal contingencies, and a short due diligence time. Buyers may also need to sell a current home before buying a new one, which puts pressure on the current seller, making them disinclined to accept your offer.
#6. Consider an escalation clause.
An escalation clause is typically only used in sellers’ markets. This is where the buyer agrees to pay a certain amount over the highest asking price in particular increments up to a certain cap. For instance, if the home is listed at $500,000, a buyer may submit an offer with an escalation clause stating that they will go up to $550,000 in $10,000 increments over the highest offer. If the seller gets an offer of $520,000, the first buyer will pay $530,000 or at least in $10,000 increments up to their cap of $550,000. Again, appraisals may come into play here so it’s important to talk to your real estate agent before deciding on an escalation clause.
#7. Do personal letters really work?
Instead of making #7 a blanket statement of using a personal letter, it’s important to understand if one will actually work. 10 to 20 years ago, a personal letter meant a lot. Buyers could talk about how much they love the property and what they plan on doing with it or make certain notes that they liked up specific feature on the property, appealing to the seller’s emotional attachment. But today, not every seller wants to deal with reading tons of letters. The letter may actually turn the seller off so this is why it is so important for the listing agent and the buyer’s agent to communicate what is important to the seller. For instance, a local seller got seven offers in a week and six of those offers included a personal letter. The seller ended up going with the offer that didn’t have the personal letter because she had just lost her husband and didn’t want to deal with reading about other people’s lives. She simply wanted the deal done. As a buyer’s agent, understanding this motivation could definitely help work up the right offer for the seller.
This seller’s market is definitely interesting and the Orlando area is not the only place where sellers have the advantage. But, with the right agent, good communication, and devising the offer that works for the seller, most buyers can get the home they really want.