In a hot real estate market you have to pull out all the stops. With cash offers dominating the field and listings often selling for over asking price, we need to get creative in finding ways to win against competing offers. In all honesty, the highest price wins most of the time. But there are a few things you can do to make your offer more attractive to a seller. We have used these strategies many times to win a bidding war against other higher offers.
Here are 5 ways to make your offer more attractive.
- Do A Pre-Offer Home Inspection
Most new listings are allowing 5-7 days before reviewing any offers. This gives enough time for all the buyers to book viewings and get their offers in, so nobody misses out on a home that sold on the first day. This also gives us time to do some due diligence before making our offer. If you’re confident that you could win over the other bidders you can have your home inspection done before the seller looks at offers, and if there are no major issues in the report you can remove the home inspection subject without having it as a condition of sale. Of course, you will need to be willing to spend the $500 or so up front, knowing that you still may not have the winning offer but it definitely raises your chances of being picked over the other offers with home inspection conditions.
- Review Title, Property Disclosure, and City File Before Making An Offer
Just as doing a home inspection prior to making an offer, you can do other due diligence such as reviewing title, property disclosures, city files, and other documents that are often conditions of the sale. Since we have a few days before the seller is looking at offers we will have time to review these documents and simply remove or satisfy these conditions in the initial offer. In a hot market sellers are preferring offers with as few subjects or conditions as possible so the “cleaner” we can make the offer the greater our chances of winning.
- Ask The Seller What They Want
It’s all about communication! It still amazes me how many offers we receive and the buyer didn’t even bother to ask if the seller had any preferred terms. Perhaps the seller has a job lined up in another city in 3 months so a longer closing date would be perfect for them. By asking the open ended question of “what would the seller like?” you can learn a lot about the seller’s position and what they would like to see in an offer.
- The Love Letter
Money talks… usually. But not everyone cares about getting the highest dollar for their home. Sometimes it helps to tell your story and why this home would be perfect for you by writing a personal letter to go along with your offer. This home might have been a long-time family home of an older couple and they would love to see another young family making the same memories instead of flipping it or turning it into a rental property. There’s also the possibility that something in your letter might strike a chord with the seller, and if there are two close offers and you’re one of them it might just be the deciding factor.
- Higher Deposit
A deposit is separate from your down payment (sort of). The deposit is a sum of money, usually between 2% – 10% of the purchase price, that is held in a trust account. It is typically paid after all conditions are met and then on closing day the deposit is applied to the purchase price. The deposit can also form part of the down payment as well. It is a good faith token that you are serious about buying the property. In certain situations where a buyer meets all their conditions and backs out of a deal illegally, or when they are in breach of contract, the deposit may be forfeited to the seller. It is important to note, however, if you back out of a deal because the home inspection was not satisfactory or you did not get financing or you did not meet some other condition then the deposit will most likely go back to the purchaser. With that being said, a higher deposit signals to the seller that you are not likely to back out of the deal except for a valid reason. This gives them more confidence in your offer.
Doing a little extra homework and going the extra mile can make a huge difference and give you an advantage over competing buyers. It isn’t always about being the highest bidder. Showing the seller that you are willing to do what it takes to make sure the sale completes is just as important.