Top 10 Tips for Writing a Winning Offer in a Seller's Market

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A seller's market exists when there are a lot of buyers competing for a low inventory of active listings. It isn't unusual for a home with all the bells and whistles to draw offers from more than one buyer. When this happens, the house often sells for more than the list price, but the price isn’t everything to a seller. There are other factors if you are trying to buy a home in a seller’s market.

Here are 10 tips for writing a winning purchase offer in a seller's market and beat out the competition:

1. Submit a Preapproval / DU Letter with Your Offer
A lender’s letter that says your credit rating has been examined and you can afford to buy the home carries a lot of weight. It tells the seller that you are serious and qualified—you are ready to purchase, and you have already committed to a lender. If the seller has a higher offer from a buyer without a preapproval letter, your offer will likely win. If you can get a Desktop Underwriter’s approval, then you are on top of your game.

2. Work with an Assertive Real Estate Agent
An agent who constantly combs the marketplace and networks with other agents is more likely to get a lead on your new home before anybody else, which is why you need to hire a good agent.

3. Write a Seller-Friendly Offer
Don't include demands on your offer that are likely to irritate or anger the seller. If it is customary in your area for the buyer to pay for their own title insurance policy, don't ask the seller to bear that cost. If most buyers demand possession at 5 p.m. on the day of closing, let your generosity set you apart from other buyers by giving the seller two or three days to move out.

4. Put Your Best Foot Forward
Simply put, this means "write your highest and best offer." You will only get one chance to make an impression on the seller, so don't make a low offer in hopes that the seller will give you a counteroffer. If the seller has received multiple offers, the low offers are often not even considered. They are shoved into the rejected pile. Figure out the top dollar you are willing to pay for the home and offer that price.

5. Give a Good Earnest Money Deposit
A larger earnest money deposit shows you are serious and are willing to put your cash on the table. Sellers will feel you are more committed if you put down, say, a 3% deposit, rather than a 1% deposit. In other words, if a home is listed at $300,000, don’t offer a $500 deposit. The seller could feel you have nothing at stake. You could easily walk away from the transaction without losing much, and that could make the seller nervous. A deposit of $5,000, $10,000, or $15,000 says “I am committed to buying this home."

6. Cash is King
If you can pay “all cash” for a home, say so. This may seem unnecessary, since it's always “all cash” in the end to the seller, even if the buyer obtains a loan. However, this lets the seller know that your transaction is not dependent on receiving loan approval, which makes you a more attractive buyer.

7. Shorten Inspection Periods
Many standard real estate purchase contracts give the buyer a set number of days to perform inspections before the buyer is required to proceed with the transaction. If the default in your purchase contract is 17 days, try shortening that period to 10 days. By federal law, unless you specifically waive your right under the Lead Paint Disclosure, you have 10 days to inspect the property for signs of lead paint contamination.1

8. Let Go of Some Contingencies
If you have spoken to your legal advisor and feel comfortable risking your deposit, you might want to consider waiving contingencies such as those for loans, appraisals, or inspections.

9. Write an Emotional Letter of Intent
If the seller has eight offers on the table, but your offer includes a letter that is personally handwritten by you, your offer will stand out. In your letter, you will want to appeal to the seller’s emotions by explaining why you are in love with the home. List all the reasons why your offer should win. If you can evoke tears of joy, or induce empathy from the seller, your offer will likely win. Remember, a bland, emotionless letter is worst than no letter at all. So when you write it, write it with all your heart!

10. Close Quickly
Unless there are extenuating circumstances, many sellers prefer to close within 30 days or fewer. If you can offer a 21-day closing time frame, for example, that might give you the edge you need to beat out the competition. For some sellers, closing quickly can be more important than an offer for more money.

We can help you be ready, willing, and able to purchase your new home. Call us at 619-806-2632 today!

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