In many of our neighborhoods, and for certain types of property, the supply for sale is less than six months. This is indicative of a sellers’ market and the result is often several buyers submitting offers to the seller or multiple bidding.
In these situations each offer is reviewed by the listing agent with the seller. They are looking for a combination of price and terms that are most acceptable to the seller – a buyer able to close and in the timeframe and accepting terms of the seller. Once accepted the buyer with the best offer would be given a timeframe in which to do a home inspection and then sign the contract. The other buyers would be in back-up position and given their opportunity to go to contract should the first buyer not go forward.
Since it is very competitive in this spring market, and with many buyers trying to take advantage of the low interest rates, a buyer should be sure they are “packaging” their offer in the most effective way to gain the seller’s attention. I often tell buyers they must present a strong case to encourage the seller to choose their offer.
1) A buyer should become familiar with the supply of similar homes or apartments for sale, recent sales prices and days on the market. This way a realistic offer can be submitted. If the supply is tight and you really want the house, bidding full price or higher might be necessary, depending on the qualities of the house. Don’t assume the seller will counter offer and you will get another chance to increase your offer. You may lose out on your dream home just because you weren’t educated on the market.
2) Buyers should meet with a lender as they begin their home search so they can define the right price range they qualify for. A preapproval letter, not just a prequalification letter should be issued. A seller wants to choose a buyer who is most likely to get financing and close. Prequalification letters indicate the lender has not looked as closely at the applicant as has the lender issuing a preapproval letter. A buyer can also ask their lender for a conditional approval, which is an even better indication of the buyer’s ability to close and more similar to a cash offer submitted by many buyers today. The lender has totally qualified the buyer and lending is just subject to the buyer identifying a particular house and the subsequent appraisal.
3) Buyers should write a cover letter summarizing their qualifications and true interest in the seller’s home. Genuinely describing their interest in the home and how living there will impact their life can sometimes highlight one offer over the other.
Paying attention to these few details can help your offer be accepted over the competition. You are entering one of the largest transactions of your life so attention to detail can make the difference.