So you’ve toured some homes, and finally found one that works for you. It’s not too big, it’s not too small, it doesn’t smell funny, and you can afford it. Whatever it is that’s caught your interest, it seems like this might be the one!
So what next? Next, it’s time to put your thoughts on paper, and let the sellers know that you want their home to be YOUR new home. That doesn’t mean you’ll get it, but the best you can do is try.
So, how to proceed? We will sit down together and review an offer for you to sign off on when you’re ready.
Here are my top recommendations when making an offer on a home.
- Speed. This market moves fast. What is fast? One weekend on market. Multiple offers. 20 showings in the first weekend. While you’re sleeping on it, the people who saw it and liked it yesterday are writing up their offer. So if you like something, don’t wait. In my experience, buyers know when they like a house, and once they like it, I couldn’t talk them out of buying it even if I wanted to. The variable is how long it takes them to actually submit their offer, and that delay is often the difference between winning it and losing it.
- Deciding your offer price. There’s only one person who can decide what to offer for the home, and that’s YOU. But I’m here to give you some pointers, based on watching many buyers decide their offer price with varying success. Start with your gut number. Let’s say the home is asking $500,000 and you’re wondering “Can we offer $490,000?” The answer is yes, you can. Even in a hot market, you can offer less than asking price if you like. But ask yourself this question. “If I offer $490,000, and find out that if I had offered $500,000 I would have won it, will I regret my decision?” If the answer is “No, I really want to try to get some money off, and if I lose it because of that I won’t regret it,” then great! If your answer is “No, I would rather increase my chances of winning this,” then there’s your answer.
Here are some rules of thumb I use to decide how much room there may be to negotiate. The longer the property has been for sale, the more likely the sellers are to be ready to accept a lower offer. You’re unlikely to succeed in negotiating much, if anything, off of the asking price if the property has been on the market for less than two weeks. And if you find yourself competing with multiple offers, then it’s generally safe to assume that the lowest offer is asking price. I have regularly seen buyers pay as much as 10% over asking price to win in a multiple offer situation.
- Other terms. The price is only one piece of the offer puzzle. There are many other terms that can make your offer attractive or unattractive to a seller. Make your offer as easy for the seller to accept as you can. A few places to start include…
-Option fee-a higher option fee is an easy and relatively affordable way to strengthen your offer.
-Option period-a shorter option period or no option period at all is always a bonus for sellers, who want to minimize the ways in which a buyer might exit the contract.
-Earnest Money-a higher earnest money deposit conveys your seriousness about abiding by the contract terms.
-Closing Date-The seller may want to close as soon as possible, or they may need some extra time to find their next home. If you can, accommodate their request for a closing date to make it as easy as possible for them to say ‘yes’ to you.
- Love Letters: We often encourage our buyers to write what I call a “love letter,” or a personalized note to tell the seller a bit about you and why you love the home. I’ve seen these letters help my clients win in multiple offer situations. They also serve to humanize you, as the buyer, which can keep negotiations friendlier. When we get to this point, Emma and I can provide you with templates from past transactions. The key to keep in mind are a little bit of emotion to pull on the heartstrings. Tell them about you, your family, and why living in this home would make you happy.
And that’s it! Don’t stress too much about writing an offer. If you like the house, make an offer. If you don’t, don’t.
Submitting an offer isn’t the same as buying the house. There are a lot of steps from contract to closing, and you don’t have to know everything under the sun about the home to submit an offer. An offer is just a small monetary commitment which locks up the property to allow you time to make sure you really want to buy it. So take the leap! If your head and your heart are telling you to give it a shot, then do it.
If you want to understand in advance what will happen if your offer is accepted, check out our post “From Contract to Closing: The Overview”