If you walk into The Gap and find a shirt you like with a price tag of $39.95 – you expect to pay no more than the ticketed price and hopefully you’ll be surprised with 20% off at the register.
Unfortunately, the home buying process isn’t as cut and dry. In today’s market, everyone wants the same shirt and there aren’t enough to go around. There isn't much on the market right now especially in the first time buyer range, so properties are going into escrow within days, with multiple offers on the table. We listed a condo on a Saturday morning and by Sunday afternoon we had half a dozen offers to present to the seller.
So, if you are a buyer, how can you make your offer stand out when it is evident that the seller will be receiving multiple offers?
- Price: If you are able to put in an initial offer above the asking price you are showing the seller that you are a competitive buyer. Even a few thousand dollars could put your offer at the top of the pile and at the very least make you competitive as the selling side decides who to counter.
- Deposit: In our market, an earnest money deposit (EMD) is typically 1% of the purchase price. This money will be held in escrow until you purchase the property, whereupon it will be a part of your down payment. In the unusual event that you cancel escrow after all your contingencies have been removed, then this becomes liquidated damages for the seller. By increasing your EMD to 2-3% of the purchase price, you are showing the seller that you are serious about purchasing their home. Increasing your deposit helps you be more competitive without taking a greater risk.
- Close of Escrow: Sellers typically want to move through the escrow process quickly and with ease. Having your agent speak to the Listing Agent about what the seller would like in terms of escrow length is helpful. Perhaps they need a rent-back period while their new home is being built or they want a 30-day escrow so they can move cross country before the start of the next school year. Including these terms in the offer can let the seller know that you are flexible to their needs.
- Contingency Removals: It is standard in the purchase contract for you as the buyer to have 17 days after acceptance of escrow to conduct all inspections. By shortening this period by even a few days, you are letting the seller know that you will conduct your investigations in a more timely manner. If any issues do arise from the inspection they can be dealt with sooner rather than later. It is fairly easy to schedule an inspector and this can generally be done within a week of opening escrow. Thus, this is another element that can make you more competitive without adding any risk.
- Tug on the heartstrings: If all else fails, go the emotional route. Include a 1-page letter to the seller about why you love their home and would like to move there. Explain a little about yourselves and maybe include a picture of your family. In the midst of all the contractual mumbo jumbo, this can be a nice little break for the sellers to get to know the faces behind the numbers – and the possible new owners of their home!
The market is quite competitive for buyers, so if you see something you really like online, try your best to view it within 24 hours. If you are seriously interested in the home, ask your agent to communicate that with the Listing Agent so that you are in the loop as to how many offers you are competing against. Happy home shopping!
