10 Smart Strategies For Getting Your Real Estate Offer Accepted

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In a sellers market it is exceptionally important that you and your real estate agent have a thoughtful strategy to ensure your offer is the one the seller accepts. Even if the market you are in happens to favor buyers the best listings will often still get multiple offers because, well, they are the best. 

My team and I have written thousands of offers on homes all over Phoenix. Here are the 10 strategies we have used to get our offers accepted even when they aren’t always the highest priced offer!

Strategies You Should Almost Always Use

These first few strategies entail no real risk and therefore make sense to use even if you don’t think you are up against other offers.

1. Write a love letter

While it’s tempting to think that all a seller cares about is their bottom line, this is often not the case. Many sellers have an emotional attachment to their home and really care about who will take over making memories in their beloved castle.

For that reason, we have found great success in attaching “love letters” to our offers. These are simple, one-page letters explaining who you are and why this home is the perfect fit for you.

<< Click here for a full explanation of all of the ingredients necessary for a perfect love letter. >>

2. Let them choose the closing date

 You will need to include a closing date on the offer so have your agent find out when the seller would like to close and choose that date. Closing faster is often better but not always. It’s best to pick a date they will be happy with by asking rather than assuming.

3. Get there first

 Speed matters, especially in our hot Phoenix market and it almost never hurts to be the first offer. This is especially true on a listing that gets 5 or more offers. Most listing agents and sellers will tire of fielding offers and tend to preference earlier offers. Be sure to have auto alerts set up by your agent for new listings that become available. These direct-updated listings from the Multiple Listing Service are much faster than third party sites like Zillow.

4. Make your best offer up front

Rather than playing games with the seller, just offer what you are willing to pay. We have seen far too many people lose a house they loved over what amounted to a difference of $10 a month in their house payment. If they make a counter offer asking you to pay more you can always so no!

5. Get prequalified for a mortgage

Most sellers won’t even look at an offer without an Arizona Association of Realtors pre-qualification letter (PQL). This letter ensures a seller that you have spoken to a lender and that the lender has looked into your finances determining that you are qualified to get a loan. These letters can be obtained from any lender with a ten minute phone call for free.

6. Increase the amount of earnest money

Earnest money is the cash that you immediately commit towards the purchase of the home. This money will be required right away if your offer is accepted and will be contributed towards your down payment and/or closing costs if the home closes. This is a deposit you make with the Escrow Company that tells the seller you are serious about buying the house. The escrow company will hold this money as a neutral third party and will only disburse it based on the rules of the contract you and the seller sign. If the home does not close because either the buyer or the seller cancels the contract then the escrow company will either give the money back to the buyer (most common) or to the seller, depending on the reason for the home not closing. The contract favors buyers and gives them lots of ways to cancel the contract and receive their earnest money back. That said, there is always some risk that the money will be forfeited to the seller. So, your decision is how much money to deposit with the Escrow Company. A good general rule of thumb is 1% of the purchase price of the home. More is a good show of faith to the seller and less can be suspicious. We generally try to stick to 1%, as more than that doesn’t move the needle much for the seller and adds unnecessary risk.

— Strategies that have some risk (use with caution) —

Below I detail the main “outs” buyers have and when you might consider waiving those outs to make your offer look stronger.

7. Inspection contingency

This allows buyers to conduct inspections for up to ten days and during that period to cancel for, basically, any reason at all. This contingency should almost never be waived entirely but can certainly be shortened. A shorter inspection period means the seller has less time sitting around hoping you are not going to cancel the deal. Most inspections can be done in as quickly as 5 days so shortening this period is very low risk it just requires more hustle.

8. Appraisal Contingency

Your lender will require you (most of the time) to get an appraisal. This is a third party opinion, which you will pay for (approximately $600), of what the house you want to purchase is worth. The lender wants to be sure you are not overpaying for the house so as to protect their loan. If the home appraises at a value lower than the purchase price of the home then the lender will only lend based on that lower appraisal value. For example:

Purchase price: $225,000

Appraised Value: $200,000

If your loan program calls for the lender to lend 80% of the value of the home then in this case they would only loan $160,000 (80% of the appraised value, since it is lower) leaving you to put $65,000 down. Basically, when a home appraises low you have to put more money down. The alternative is for you to cancel the purchase of the home and get your earnest money back. 

You can waive this right to cancel based on a low appraisal. This ensures the seller that if the home appraises low they need not worry about you canceling for that reason. Waiving this right is moderately risky. If you have the extra cash needed to make a bigger down payment if needed then you might not be concerned about this. Additionally, agents can often speed up the process of getting an appraisal done so that you get the appraisal back fast enough to cancel during the ten day inspection period, should the appraisal come in too low. That right there is a sneaky little trick! 

9. Loan contingency

The loan contingency allows you to cancel the contract and receive your earnest money back if you are denied a loan. The crazy thing about this contingency is that it has no time frame, meaning you can cancel the day you are supposed to close! This is a huge risk for the seller. As a buyer, you can waive this contingency but it’s very risky to do so. Waiving this right means that if you lose your job or some other unforeseen circumstance pops up and your loan is denied you lose your earnest money. In some cases this risk is low and the earnest money is not substantial enough to be concerned with so this might make sense to do. However, a more moderate approach is to attach a timeline to this contingency, like waiving it after 25 days (a timeframe that will likely be enough time for your loan to get fully approved). This reassures the seller with little risk to you.

10. Use an escalation clause

These are the magic bullets of making real estate offers in Phoenix. In an escalation clause you offer a certain price, say $200,000, AND you offer to beat any other offers but a given amount. For example “purchase price to be $200,000. Buyer will increase purchase price to $2,000 net more than any other higher competitive offer”. In this case you are offering to pay $204,000, for example, if the seller gets an offer for $202,000. This style of offer guarantees you will be the highest offer (unless another offer uses this technique which is rare. In that case generally the seller talks to both parties and asks for a highest number).

But what if the seller gets an offer way higher than I’m willing to pay $2,000 more than? What’s great about this strategy is that you need not fear this circumstance. You can always cancel right away during the inspection period if this happens.

DISCLAIMER

While these are powerful and safe strategies it is CRITICAL that you work with a real estate agent who is familiar with them and knows the contract inside and out. It is very easy to screw these things up by using incorrect language or missing a detail.

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