Do you watch those real estate ”˜reality’ shows on Bravo? You know the ones I’m talking about. It’s always three douchebag Realtors in some super pricey market sleazing their way into sales and making insane paychecks. I know, I’m obsessed, too. My husband automatically puts in his ear phones whenever I turn one of those shows on because he knows 6.8 seconds in I’m going to start screaming, “That’s not how it works! This is ridiculous!” But I can’t help myself. I have to watch them.
One of the things that bothers me most about these shows (besides how they always do business while shopping in ludicrously flamboyant and expensive clothing stores) is how when they get an offer from a buyer it’s a verbal offer and always just the purchase price.
Inevitably stern and older female buyer’s agent: My client says he’ll do 4 million, 350 thousand and not a penny more. Your seller would be greedy to ask for more. Please tell him I said that.
Young male douchebag listing agent: I’ll take it to him, but I’m telling you now it’s not enough. Your client is grievously undervaluing the Japanese toilets and the Dutch marble counters in the kitchen. You, ma’am, are a crook.
Maybe this is how it works in Hollywood and NYC but I sincerely doubt it. Beyond the fact that I have never in my life taken a work call while sitting in a bubble bath, and that I think it’s just silly when they insult each other as part of the negotiation, there is way more to an offer than just the purchase price. There is a reason why we review offers on paper with complete terms.
In Metro-Phoenix’s current crazy seller’s market, a buyer who’s maxed out his prequalified loan amount on an offer can use a boost to his offer any way he can get it. So I’ve come up with a list of 10 ways to strengthen your offer without adding a dime to the purchase price:
- Sooner close of escrow date – Many sellers want the deal done as quickly as possible. This is especially true of lender and investor owned properties. If it’s owned by a normal seller living on the property, it’s worth a call to the listing agent to see if the seller has a preferred close of escrow date. Sellers have lives, too. If you schedule around their child’s 3rd birthday party, it just might give your offer an edge.
- Waive appraisal – If your offer is financed but you have a significant down payment, you may be able to waive your appraisal contingency. This means that you agree to pay the purchase price on the contract regardless of what an appraiser thinks the value of the house is. It means that you will have to be putting down the amount between the appraisal and purchase price plus the minimum down payment, so it’s not an option for everyone, but in this market with appraisals coming in all over the board, it’s an attractive feature to selles.
- Increase earnest – Earnest money is simply the money you give to title to keep you honest in the transaction. Putting down a larger earnest doesn’t cost you a dime more in the bigger picture, as long as you’re willing to live with the rules of the contract and it gives the seller the impression you’re serious and stable.
- Don’t ask for concessions – In our current time of ”˜cash is king’, many buyers want to ask the seller to pay their closing costs. This reduces the seller’s net by generally about 3% of the purchase price and weakens your offer. If you don’t need it, don’t ask for it.
- Include an As-Is Addendum – The standard contract allows the buyer an inspection period and then the right to ask the seller to make repairs. The seller doesn’t have to agree, but then the buyer has the right to cancel. If the buyer includes an ”˜As-Is Addendum’ with his contract, he still has the right to his inspection period and can cancel for anything scary he finds, but it lets the seller know he doesn’t plan on asking for repairs, which can be very attractive to a seller.
- Write a letter describing your family and why you are looking forward to living in the house – Normal sellers like to think they make their decisions based only on finances, but the truth is they’re selling a part of their lives. Many sellers really want nice people who will take good care of their house as their buyers. If you make an effort to let them know this is who you are, they may just pick you over the buyer they know nothing about. (I should note if this is a lender owned property, save your ink and paper. The bank doesn’t give a rat’s patootie who buys the house.)
- Use the title company the seller requests – This is generally something that’s important to the Realtor and not the seller, but regardless, it’s one less battle that agent will have to fight and makes your offer just that much prettier and shinier.
- If you happen to meet the seller compliment them on their choice of everything in the house – Again, sellers are usually people with souls, who are vulnerable to flattery. Exploit that knowledge for everything it’s worth in a market like this. The seller holds the power; you gotta do what you gotta do to balance it out. Ex: Oh Seller, I just adore the color scheme in this room. I can’t tell you how long I’ve wanted a teal and peach wallpaper border. Can you tell me where you bought that poster of howling wolves? I really think it looks so right there, if I get this house I might have to buy one just like it. Amazon?
- Have your agent use connections to your advantage – If your agent knows or has worked before with the listing agent, have her call and sweet talk the agent. If two offers are the same, it makes sense to go with the one represented by an agent you know and trust. This makes the transaction go more smoothly. It can pay off to play the favoritism card.
- Pay cash – This one also isn’t an option for everyone, but if it is, use it!