How to Make a Strong Offer on a Home

Dated: December 19 2020

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In today's competitive market you'll not only want to educate yourself about how offers work, but how to decide and present the strongest possible offer.

Basic Overview: You'll work with your agent to deliver the offer to the seller's agent on the forms used in your state. It's a legally binding document once it's signed by both you and the seller. 

The seller will either accept your offer, or will counter your offer (you can accept or counter again), or the seller could also flatly decline. If and when all parties do agree to the terms, your agent will draft a final offer, and all parties will sign it. Then, you are officially "Under Contract."

Before anything else:

  1. Set your budget - You'd be doing a great disservice to yourself if you don't have the budget to cover your monthly mortgage. Establish what you're comfortable paying on a monthly basis to hone in your home search and try to reasonably find a home within that price range.
  2. Get a pre-approval letter from your mortgage lender - These days the market moves fast. If you find a home you love, presenting the pre-approval letter with your offer will allow the seller to see you as a serious buyer. Most times, it is required.
  3. Hire the right agent - an effective communicator is especially important during this process. It's important to get good representation and a person who has YOUR best interest at heart.
  4. Decide where you want to be flexible - Can you be flexible? Can you offer rent-back or a bigger down deposit? Are you able to make a purchase without having to sell your exisiting home? Decide where you can bend a little to make this deal go through. Afterall, the seller wants to work with someone who is more accomodating that someone who is difficult.
  5. Be ready to make a move - When your dream home comes along, make a move! Sure, the timing has to be right but be ready to act swiftly and seriously when the opportunity presents itself.
  6. Figure out a fair price - Your agent will be able to pull comps on the home, meaning he/she will do an analysis of comparable homes in that specific area to see what the going rate is. From this overview, you should be able to discern a fair price. Also keep in mind, the seller's situation and how motivated he/she is to sell it. Figure out as much knowledge and information on this property (through the help of your agent) to make the best possible offer from an educated position.
  7. Consider an escalation clause - In a hot seller's market, buyers often consider escalation clauses. This is an addendum that sets conditions for escalating the offer price automatically if the seller gets a back up offer, up to a certain amount. For example: you can add in an escalation clause of $1000 of up to $450,000 ($50,000 above asking price). If the most competitive offer is $420,000, you win at $421,000.
  8. Leave emotions behind - This is a large transaction, therefore, you should treat it as a business deal. Keep your head cool and remain pragmatic. Do not hang all your hope on just one property.
  9. Outline contingencies (if any) - A simple offer without contingencies looks best in a competitive market. But if you must include any, you should outline areas where you can get your full earnest money deposit (EMD) back. Most common: A home sale contingency - where buyer can terminate the contract if their existing home does not sell in time. Remember, once you go "Under Contract" you still have 4 areas in which you can terminate and recieve your full deposit, unless you decide to waive any of these steps: EMD, Inspection, Appraisal, Loan Terms.
  10. Write a love letter (if applicable) - Sometimes, sellers like reading heartfelt stories and knowing that their home will be in good hands. Get advice from your agent to see how you can best approach this tactic without it causing potential problems. Check with your state to see if it is allowed or if the seller's agent specifically asks NOT to include any love letters.
  11. Submit your offer - Once all these steps have been made, your agent will carefully draft an offer for you to sign (digitally). Then it'll be sent to the selling agent where he/she will review all offers on the table with the seller.  HIGHEST & BEST OFFER is all you can hope for to win. Good Luck!
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Jennifer Lee

Jennifer is perseverant, honest, and possesses solid interpersonal skills to bring the best service for her clients. She makes sure to strike the “right balance" by empowering her clients with infor....

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