In today’s competitive market, being creative when writing an offer for a buyer can give you the competitive edge you need to have your offer accepted.
In today’s competitive Broomfield real estate market I find myself frequently competing in multiple offer situations and I have to find a way to give me buyers as much of an edge as possible. Today, I’m discussing six tips for writing winning offers for buyers.
It doesn’t seem like COVID-19 is having an adverse effect on the local real estate market. In fact, just the opposite. Insanely low interest rates combined with more companies adopting a work-from-home culture has buyers and sellers considering their options and reevaluating their living situation.
Here in Broomfield, low inventory combined with high demand has buyers feeling the pressure of an extremely competitive market. Having to compete in multiple-offer situations frequently has forced me to come up with creative ways to make my buyer’s offer as attractive as possible to the seller. Depending on the situation it may take one or more of these strategies to create a winning offer.
1) Use an Escalation Clause
An escalation clause allows for the buyer to submit an offer at a particular price but if the seller receives an offer with a higher price the escalation clause automatically increases the offer price incrementally up to a pre-determined cap the buyer is willing to offer. Escalation clauses are the most common strategy in multiple offer situations.
2) Appraisal Gap Coverage
Appraisal gap coverage guarantees the buyer will cover any shortage between the offer price and the appraised value. It’s always a good idea to cap this amount as well. Any shortage amount will increase your down payment.
3) Make Inspections Easy
There are a few ways to make inspections easier on Sellers. Some are more aggressive than others and as a buyer it creates different levels of risk for each.
Offering to purchase the property “as-is” will likely be the most attractive to a seller. However, just because you are purchasing the home “as-is” doesn’t mean you shouldn’t inspect the home. The idea is to communicate that you’re comfortable with the condition of the home and won’t ask for any repairs. However, if you complete the inspection and there are too may red flags, you can still terminate the contract.
A second, more popular, option is to limit your repair requests to those related to the health, safety, structural and mechanical components of the home. This strategy makes sellers more comfortable with the offer because they have assurance they won’t be nit-picked during the inspection period.
Finally, the third option is to place a pre-determined cap on the monetary amount of repairs you will ask for. For example, requesting no more than $500 or $1,000 for necessary repairs based on your comfort level and overall feeling about the home.
4) Home Warranty Coverage
Unless you are purchasing the property “as-is” a home warranty can help limit the cost of repairs to the seller. Once the home closes the warranty can be transferred to you so you’re protected for at least the first year you own the home.
5) Post-Closing Occupancy
A post-close occupancy agreement or free rent back is a great way to cater to the needs of the seller. In my conversation with the listing agent I will ask about the seller’s plan and whether or not they have a replacement home. If not, offering the ability for the sellers to remain in the home post-close with free rent can be advantageous.
6) Tried and True Methods
Offering non-refundable earnest money or shorter deadlines can also help in multiple-offer situations.
At the end of the day it’s my job to offer a many options as possible to help you write a winning offer and move into your new home.
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