6 ways to craft an offer a seller can't refuse
4. Make concessions up front.
Armed with whatever you've learned about the sellers, you're ready, with your agent, to imagine any objections the seller might make to your offer. Decide how to neutralize each objection and make life easier for the seller.
Here are some convincing concessions to consider:
- Make a "clean offer:" Buyers frequently ask sellers for help paying their closing costs. Make a "clean" offer with no request for help.
- Include an automatic escalation clause: In a competitive environment, offer to automatically increase your offer by a specified amount – say, $500 — over the highest bid. You can put a limit on how high you'll go or not. Be sure your offer requires the seller to show you any other offers in writing.
- Time: When sellers want to move quickly, jump, if you can. Sellers often are grateful to save a mortgage payment, storage costs or rent on interim storage or accommodations. Or, if sellers need to wait until a new home is free, or because they need time to pack, let children finish school or say goodbye to friends, offer to delay your move-in date. You can always charge rent. You can also use this tactic in reverse to get your own needs met: When Glink and her husband bought a home long ago, they sweetened the offer with a $3,000 bonus if the deal could be done quickly, by a specific date. This got their deal closed quickly.
- Earnest money: The (refundable) deposit for $2,000 or $3,000 that you attach to a bid to bind the offer is called "earnest money." "The bigger the deposit, the more serious you are," Hayman says. To make a good impression, offer more, up to 10% of the purchase price. To further sweeten the deal, Wickman suggests making part or all of the deposit non-refundable after the home has passed inspection, to demonstrate that you want to stay in the deal.
- Accelerate the deal: A purchase offer is typically contingent on certain milestones that are set by state law: The buyer has a certain number of days to get financing and an appraisal, the seller has a time frame to have an inspection done. Where the law allows it, you can shorten or eliminate deadlines to raise your offer's appeal.
- Waive the appraisal: Appraisals have become a source of anxiety for sellers, and deals often fall apart because the appraiser finds the home is not worth the purchase price that the buyer and seller have agreed on. Banks will only loan you a percentage of the home's appraised value. But, if you're able, you can include in your offer the promise to pay any difference in cash — up to, say, $5,000 over the appraised value.
- Waive the inspection: Here's how this enticement works: Some sellers will take a lower price if you offer to buy the house "as is." You, however, reserve the right to back out of the deal if you don't like what the inspection turns up. Some sellers love this because it allows them to close quickly, free of the cost and burden of correcting unforeseen problems. Says Wickman: "To buy a house 'as is,' to say to a seller, 'You won't have to do anything, no matter what the appraisal is, no matter what the inspection,' that could be a huge difference."
- Wave money: Never underestimate the sweetening effect of money. Offering the full list price or more is the traditional way of getting a seller's attention.
- Wave cash: If you've got the wherewithal, offer to pay in cash. For a seller, cash signals your financial solidity and promises a quick closing and no waiting for you to get financing.
Pull out all the stops
5. Write a love letter to the sellers.
When you really want a place, you'll go to some special lengths. "Sellers care deeply," Glink says, when you explain with sincerity what owning their home would mean to you, who you are and how you envision your life there.
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"If I were a buyer, I would say to the seller: 'I would take care of your home. It looks like you've got a lot of love in the home and we love it,'" Wickman says. "I think I'd humble myself. I'd say, 'If it was possible that we could pay more, we would.'"
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Hayman tells of Phoenix-area clients searching for a one-level home with tile floors and wide hallways in the $200,000 price range. "Lo and behold, we found the perfect house," Hayman says. "It was owned by an investor and was vacant, but there was another (higher) offer. I had my buyer's wife write a letter from her heart. She said, 'I have lupus. I'll be in a wheelchair soon. I can't tell you how much it will mean to me to be able to get this house.'"
Within an hour after Hayman personally presented the offer to the sellers, their agent called to accept. The woman's letter had persuaded the seller to forgo a competing bid $15,000 higher.
6. Get your offer presented in person.
Finally, the expert sales trainers say your offer has a far better chance when your agent presents it to the sellers in person. Not all agents will do this. And not all sellers' agents will let them. But, as a buyer, you can sure try. Start by asking, when you're interviewing agents, "Are you going to present my offer in person to the seller?"
It's an old-fashioned practice that's been largely abandoned in favor of sending a fax. "To me, that's a) lazy and b) less effective in terms of representing your client," Hayman says.
The advantage of personally delivering your offer:
- Your case is presented directly, heading off any misinterpretations.
- Your agent can directly address any questions or objections.
- The chance to "humanize" your offer and convey something about you can help tip the deal in your favor.
As Wickman puts it, "people buy people."