Ask most buyer agent brokers for their best ideas to win the accepted offer for their clients this year, and you’ll hear something like: Outbid Everyone. If that’s their best idea, they’ve got no idea. After three years of markets extremely advantageous to sellers, REALTORS should have more ideas to help their clients win in the home buying competition.
Eight years ago, long before the market turned sharply against buyers, we started looking at ways to give our clients ideas to negotiate the competition out of the way without overpaying. We enjoyed a unique advantage for years while most agents continued to write offers the way they always had. By knowing the terms of purchase agreements, contingencies, and the transaction mechanics better than most agents, we guided our clients to outsmart the competition. We bet that home sellers are more likely to accept contracts that carry the least risk when the price is close. We were right. The good news for 2022 is that this strategy still works.
Structuring an offer to appeal to the seller’s security needs is easy, provided the buyer does their part. Do these things first to win an accepted offer in competition without being the highest bidder on price.
- Find a lender who will underwrite your loan application before finding a house to buy. Lenders will work with you and your agent to draft a letter for you to include with your offer that accomplishes the objective of the commitment letter most buyers promise to provide 30 days after acceptance. With this strongly worded letter, you level the playing field with many buyers who don’t need the protection of the commitment letter contingency.
- Gather the evidence that you have access to all of the funds you need to buy without taking a mortgage. Most people who think they got beat by “cash buyers” are wrong. They got defeated by people who took a mortgage but showed the seller that they had access to enough money to buy if they didn’t get the loan. Consider all of your options before deciding you don’t have access to a half-a-million dollars. Many “cash buyers” don’t have the cash, but a relative does, and often the relative is willing to promise to provide the funds if the buyer cannot qualify for financing. Don’t rule this out. I’ve seen buyers discover they have trust funds they were unaware of or had a parent or grandparent who considered them a reasonable risk to promise to provide the funds with no strings attached, knowing they would never need to do more than give the letter.
- Understand the limited value of contingencies. When the market favors the buyer, you can include any number of contingencies, and the seller probably won’t object; not today. The protection of some contingencies isn’t worth the cost or the risk that the contingency will discourage the seller from accepting your offer. Testing, inspecting, investigating, getting another person’s opinion aren’t helpful to your goal of getting your offer accepted. The seller’s goal is to get to closing with no worries. When you show you are the most committed buyer, your value goes up even when your price is less.
- Select an agent who knows how to make the Offer work for you. The practice of real estate is a contract negotiating business often left in the hands of people who don’t like contract work or think they can protect a buyer from every possible risk. The State approved forms are dummy-proof. But, if all you do is check the boxes and fill in the blanks, every offer will look risky to the seller, regardless of the strength of the buyer. Prepare yourself by finding an agent who can show you how they can structure your offer to fit your tolerance for risk and best show your commitment to close.
- Let the skilled agent lead. You’d think I would be wise enough to take the advice of my REALTOR when I tried to buy in this market. Eventually, I was, but my first efforts got the same results I helped my clients avoid. Trust the skilled agent. If they have a plan to get your offer accepted without depending on you outbidding the crowd, go with their program. Moving into your first choice home is more enjoyable than living and learning a few times over.