By Pete Sabine
In a seller’s market, you may have to compete against other buyers, which raises the stakes and makes it especially important that you move through these steps quickly. When you have found a home you love, here is what you need to do to craft an offer that appeals to sellers.
Use an escalation clause
In a multiple-offer scenario, the last thing you want to do is assume another buyer is paying far above the asking price and submit a higher offer based on this assumption — you might get the property but end up realizing you could have gotten it for less. Consider including an “escalation clause” which states that you are willing to pay a specific dollar amount over the highest competing offer.
Here is an example:
A home is listed for $850,000 and it has three other offers. You submit an offer of $850,000 with an escalation clause that says you will pay $5,000 more than the highest offer, up to a maximum offer price of $860,000. Then, if another buyer comes in at $855,000, you will automatically offer $860,000 to secure the deal, without going over the maximum amount you are comfortable spending.
Accommodate the seller’s timeline
Ask if the seller needs a quick close or an option to rent the home after closing to allow enough time to pack and move. For some sellers (like those buying another home or relocating for work), timeline can be as important as the sales price.
Most buyers include contingencies in their offer. In a competitive market, waiving contingencies can make your offer stand out. You can remove the appraisal contingency that is usually included for buyers financing a home purchase as well as the loan contingency only if you are fully pre-approved by your lender. Inspection contingencies are common — and some buyers waive their inspection contingency in hot markets, but this can be risky.
The home sale contingency, where your offer is contingent on selling the home you currently own, is included when you need the equity from a home you are selling to purchase your next home. This can make your offer less appealing to a seller, who wants certainty in their plan to fit their own timeline priorities. It is best to complete the sale of your existing home before making offers for your next home.
Write a personal letter to the seller
Some sellers are sentimental about selling their home and may focus on their desired buyer profile over the highest sales price. When dealing with a seller who has lived in their home for many years with pride of ownership, they might be focused on selling their home to someone who will take good care of it. Write an insightful and sincere letter about why the home is a perfect match and what you love about the house and the community. Let the seller know you are a serious buyer.
Over the past 35 years, we have successfully negotiated over 1000 real estate purchase agreements. Call or text 925.297.5335 to benefit from our real estate expertise for your next home purchase.
Pete Sabine & Leslie Whitney. Compass. License #01866771