Tips for Working with Buyers in a Low-Inventory Market
Right now, it is one of the toughest real estate markets in history for buyers. With buyers pulling out all the stops on offers and the amount of inventory continuing to dwindle, many are wondering if there are creative strategies out there to help your buyers win in a multiple offer scenario. Here are some tips for buyers writing offers on homes.
Tip #1: Write the offer as high as possible.
This might be one of the most obvious ideas out there…but the higher the offer price, the more enticing for the sellers. Assuming you are also including an appraisal gap to give the sellers peace of mind if an appraisal were to come back low.
From a sellers perspective, cash is always preferred as they don’t need to worry about financing or appraisal issues. With that said, buyers with higher down payments of 10-20% or more will hold more weight. The more money you can put down on a home, the stronger your offer appears to sellers.
Tip #2: Appraisal Gap Coverage
Appraisal gap coverage is basically promising to pay the difference, or a part of the difference, if an appraisal on a property comes back low. With offers going well over asking, sellers start to get worried if the home will appraise at the higher sale price.
A buyer with a bigger down payment of 10% or more can offer to give the sellers “gap coverage” up to a certain amount or full amount. By moving some of the down payment to cover the gap, it doesn’t change the additional money amount needed by that much, and can be a few more dollars in monthly payments.
Tip #3: Take out any unnecessary contingencies.
The cleaner the offer- the better. Take out anything that is unnecessary.
Tip #4: Stay flexible on closing date
Being flexible with your closing date can be a big plus to sellers- asking what they are looking for and accommodating to what they need is a huge benefit.
Tip #5: Offer a higher amount of earnest money
Typically earnest money is around 1% of sale price- this just gives the sellers some comfort that: you have cash available and are a strong buyer, peace of mind, and it shows you have skin in the game so to speak.
In multiple offers it is not uncommon to see $10,000 or more in Earnest Money. Earnest money has to be liquid, and would have to be sent to sellers within 3 days of an accepted offer. It gets cashed and held by the listing agents Brokers Trust account and then gets credited back to you towards your down payment at the closing.
Tip #6: Offering an Acceptance Bonus
An acceptance bonus is basically a cash gift to the sellers as a thank you for accepting your offer. This is not something that would apply towards your down payment, but would go directly to the sellers. Amounts like $1,000 or $2,000 can go a long way when they have multiple offers similar to yours.
Tip #7: Writing a Love Letter
Writing the sellers a love letter stating what you liked about their home can play to emotions, some agents will not present these with offers but we can always try.
At the end of the day, the right home will come along and you will eventually find the perfect place! Put your best foot forward and try to stay positive in this tough market.
And when you do find the perfect home, we would love to be your resource for Title & Closing Services. Order title today.